Gold Fields sells its 45% shareholding in Asanko for $170m

Gold Fields Limited (Gold Fields) (JSE, NYSE: GFI) has announced the divestment of its 45% shareholding in the Asanko gold mine in Ghana to TSX-listed joint venture partner Galiano Gold for a total consideration of $170 million.

Gold Fields Limited will also receive a 1% net smelter royalty on future production from the Nkran deposit, the main deposit at the mine.

The Asanko mine is currently owned 45% each by Gold Fields and Galiano Gold, with Galiano managing the mine. The Government of Ghana holds the remaining 10%.

The transaction will be settled by Galiano to Gold Fields through a combination of upfront, deferred and contingent consideration

It comprises $85m which will be settled with $65m in cash and $20m in Galiano shares on completion of the transaction, $25m to be paid on 31 December 2025, $30m to be paid on 31 December 2026; and $30m plus a 1% net smelter royalty to be paid once more than 100koz of gold equivalent is produced from the Nkran deposit.

The royalty is capped at a volume of 447koz.

The company currently has a 9.8% shareholding 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, Gold Fields Interim CEO, comments on the divestment: “We are pleased to have concluded this agreement with Galiano.

It is clear that the committed path forward for the Asanko mine requires consolidated ownership. Gold Fields is pleased to realise value for its holding now, while providing flexibility to Galiano in the recapitalisation of the mine and resuming mining to maximise its prospects of success.

“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,” Preece adds.

The current transaction, which is expected to be completed during Q1 2024, is subject to a number of conditions, including regulatory approvals.