Gold Fields says progress “slower than expected” on AngloGold JV

Martin Preece, Interim CEO, Gold Fields

GOLD Fields said it was taking longer than expected to conclude an agreement to form a joint venture with AngloGold Ashanti on adjacent mines in Ghana.

The deal – announced in March and aimed at operating AngloGold’s Iduapriem and Gold Fields’ neighbouring Tarkwa mines as a single operation – requires the support of the Ghanaian government.

It is envisaged that Ghana’s government will take a 10% stake in the joint venture diluting Gold Fields and AngloGold to 60% and 30% respectively. However, it requires the approval of the Ghanaian government.

The joint venture will yield average production over the life of mine of about 600,000 oz while the industry benchmark cost of all-in sustaining costs would be below $1,000/oz over the first five years and $1,200/oz over its life of mine, the companies said.

Martin Preece, interim CEO of Gold Fields, said today discussions with the Ghana government were continuing but progress had “been slower than expected”.

A $3bn credit agreement between the Ghanaian government and the International Monetary Fund in May had helped ease the West African country’s worst economic crisis in a generation. But pressures still exist.

Presenting the country’s budget speech earlier this week, finance minister Ken Ofori-Atta said an in-principle agreement to restructure additional debt with Ghana’s official bilateral creditors would soon be formalised, said Reuters.

Total public debt has swelled to around 100% of gross domestic product, food inflation is still above 40% and interest rates are at record highs.

Preece was commenting in Gold Fields’ third quarter production update in which attributable production came in 9% lower year-on-year at 542,000 ounces. The decline was put down to planned reductions in output at Damang in Ghana. The Tarkwa mine, also in Ghana, was also negatively affected by lower yields and safety related stoppages.

Despite lower gold production, Gold Fields said it expected to meet previous guidance for the year of between 2.25 and 2.3 million oz (2022: 2.23 million oz).

It’s been a busy year for Gold Fields. In addition to announcing its plans for a joint venture with AngloGold, the company announced in May it had bought a 50% stake in the Windfall project in Quebec from owner Osisko Mining for C$600m. In October it announced it had appointed former South32 executive Mike Fraser as its new CEO.