Gold Fields to sell 45% stake in Asanko for $170m

Asanko Gold Mine

GOLD Fields is to sell its 45% stake in Ghana mine Asanko to joint venture partner Galiano Gold, a Toronto-listed firm, for $170m.

An upfront payment of $85m will be paid for the asset consisting of $65m in cash and the balance in Galiano shares. Thereafter Galiano will make two cash payments of $25m and $30m on December 31 in 2025 and 2026 respectively.

A further payment of $30m plus a 1% net smelter royalty will be payable once more than 100,000 ounces of gold equivalent is produced from Nkran which is Asanko’s main mineral deposit. The royalty is capped at a volume of 447,000 oz, said Gold Fields.

As Galiano already owns 45% of Asanko, it will become the 90% shareholder with the balance held by the Ghana government.

Gold Fields currently has a 9.8% stake in Galiano and the share purchase agreement limits the shareholding that Gold Fields can raise this to 19.9%. Should the market value of Galiano shares be less than the requisite $20m, Galiano will make up the difference with an additional cash payment.

Martin Preece, interim CEO of Gold Fields said the best step forward for Asanko mine was “a consolidated ownership”. The sale would provide Galiano to recapitalise the mine, he said, adding: “Divestment of our interest in Asanko is part of our ongoing disciplined portfolio management process and releases capital for deployment by the company in line with our other capital allocation priorities”.

The deal is expected to be completed in the first quarter of 2024 subject to “a number of conditions including regulatory approvals”.

Gold Fields is also waiting on the approval of the Ghana government before finalising an earlier deal – a joint venture merging its Tarkwa mine with Iduapriem, a neighbouring mine owned by AngloGold Ashanti. The joint venture proposal, unfurled by the two companies in March, would create Africa’s largest gold mine, they said.

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, approval for the joint venture has not yet been forthcoming.

The two operations produce 700,000 to 800,000 ounces a year and the joint venture will produce 900,000 oz annually.