Gold Fields to take break from M&A after registering Yamana rebound

GOLD Fields would take a breather from new merger and acquisition activity in the wake of its proposed C$600m purchase of a 50% stake in the Windfall deposit and adjacent properties in Canada, said Martin Preece, interim CEO of the South African miner.

“We want to make this work so we’ve got enough on our plate,” said Preece in a conference call on Tuesday. “We have got the deal in Ghana and the commissioning of Salares Norte so we will get some breathing space.”

In its announcement, Gold Fields said it had paid C$300m in upfront cash to Osisko Mining, a Toronto-listed gold developer. The balance of the acquisition fee for the project – which is forecast to yield about 294,000 ounces – will be paid once project permitting is complete.

Commenting in its first (March) quarter production results today, Gold Fields said it would “continue to look at value accretive inorganic opportunities to bolster our pipeline”. These potenital opportunities included greenfield and development projects, bolt-on acquistions as well as producing assets.

Sven Lunsche, spokesman for Gold Fields said the company was not actively seeking new deals but would be keeping its ear close to the ground.

Since the disappointment of failing to buy Yamana Gold last year, Gold Fields recovered strongly unveiling a proposed joint venture in Ghana with AngloGold Ashanti in March. In addition to the commissioning of its $1.02bn Salares Norte project in Chile, the company will add about 650,000 oz a year in replacement production from about 2025.

The projects don’t entirely replace production from Cerro Corona in Peru which is due to close, nor the Damang mine in Ghana where production is also declining. Nonetheless, the last six months represented a strong comeback for Gold Fields following Yamana.

Shares in the company have more than doubled over the past six months and are currently trading at an all-time high.

The government asset manager the Public Investment Corporation had subsequently responded to Gold Fields’ higher weighting in the JSE Index by increasing its holding in Gold Fields to about 15.3% from about 10.09 previously. “But we hope that it also reflects confidence in our performance,” said Lunsche.

Gold Fields is valued at R285bn on the JSE.

The group said today first quarter production and all-in sustaining costs (AISC) were largely flat year-on-year at about 577,000 oz and $1,152/oz respectively.

A highlight of the first quarter numbers was the continued stability of South Deep, the South African mine which was Preece’s sole focus prior to the resignation of former CEO Chris Griffith in November. The mine produced 88,000 oz in the first quarter, a year-on-year incrase of 13%.

However, AISC of $1,1317/oz at South Deep represented a year-on-year increase of 12%, highlighting the offsetting impact of rand inflation on the asset.

Gold Fields also provided an update on its environmental, sustainability and governance plans as laid out in December 2021 and which include a 50% decarbonisation target by 2030. As of end 2022, scope 1 and 2 “absolute” emission reductions, measured against the group’s 2016 baseline, had been reduced 18%, Gold Fields said.