Gold Fields Buys Aussie Mines after Loss



Gold Fields Buys Aussie Mines after Loss

BYLINE: Reuters

Hit by lower gold prices and rising costs at home, Gold Fields reported a second-quarter loss yesterday and said it was expanding abroad with a $300 million (R3.1bn) deal to buy three Australian mines from top producer Barrick Gold.

The company said it made a net loss of $129m in the three months to June compared with a net profit of $27m in the previous quarter and $105m in the same quarter last year.

Earlier this year Gold Fields separated off the bulk of its assets in South Africa, where labour and political risks are seen as relatively high in the context of a sharp fall in gold prices, a point underlined this week by a new strike threat.

"The gold industry [in South Africa] is frankly in crisis at the moment," chief executive Nick Holland said.

Gold Fields' shares fell by 9.13 percent to close at R59.89 yesterday, with the strike threat in South Africa hitting the shares of other producers in the country.

The company said the Barrick acquisition, which would be 50 percent payable in shares, would add 452 000 ounces to its annual production and make it Australia's third-largest gold producer. The company expects to produce between 1.83 million and 1.9 million ounces this year.

Following the acquisition, Australia would be Gold Fields' largest regional production centre, it said, accounting for 42 percent of group production, with Ghana decreasing to 34 percent and Peru and South Africa remaining largely unchanged at 13 percent and 11 percent, respectively.

"The acquired assets are located in a preferred jurisdiction that we know well and where we have significant operational and management experience and infrastructure to maximise the value of the acquired assets," Holland said.

"This acquisition further repositions Gold Fields as an international gold producer with a well-balanced global footprint, which should enhance our risk profile and global credit rating," he said.

The company said its second-quarter loss was mostly due to impairment charges in Ghana of $143m at its Tarkwa mine and $127m at Damang

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