JOHANNESBURG (I-Net Bridge) -- Gold Fields [NYSE:GFI] has completed the purchase of Barrick Gold's [NYSE:ABX; TSX:ABX] half of the South Deep for $1.2 billion in cash and the issue of 18.7 million new shares.
Gold Fields announced the deal in September and at the same time announced an offer to minorities in Western Areas [JSE:WAR], the company that owns the other half of South Deep.
Barrick acquired South Deep through its takeover of Placer Dome Inc. last January and has been reviewing its acquisitions in what some analysts suggest is an effort to clear out underperforming Placer-owned properties.
South Deep is one of the deepest mines in the world and has a projected mine life of 70 years. In 2005, the mine produced more than 460,000 ounces of gold. But the mine has had trouble meeting operating forecasts for some time, with its problems deepening in May after an accident hurt production.
''The proceeds from this sale further strengthen Barrick's financial position as we advance our pipeline of projects, including the Sedibelo platinum project in South Africa,'' Barrick CEO Greg Wilkins said in a releaase.
Earlier this week, John Munro of Gold Fields told I-Net Bridge that once the Barrick deal is closed management would then focus on the Western Areas side of the transaction.
"The conclusion of the Barrick deal and the acquisition of the JCI shares in Western Areas is a significant milestone in our strategy of acquiring control of the South Deep gold mine and bringing ownership of this asset home to South Africa," said Gold Fields CEO Ian Cockerill in a statement. "The Barrick deal gives us effective control of the operations and allows us to begin the process of realising the full potential of this world-class gold asset."
Gold Fields owns over 41% of Western Areas, after today announcing that it had exercised an option with JCI, a large Western Areas shareholder, to purchase its remaining stake in the company.
Western Areas owns half of the South Deep gold mine, which neighbours Gold Fields' Kloof Mine, West of Johannesburg. The acquisition would maintain production on the company's South African production for longer than is currently forecast from existing assets.
An offer to Western Areas shareholders of 35 Gold Fields shares for every 100 Western Areas shares held has become unconditional, although Gold Fields has not announced a closing date yet.
Gold Fields today exercised its option to purchase another 9.96 million Western Areas shares from JCI, under an agreement to purchase JCI's holding in the gold company.
In September, Gold Fields announced an all-paper offer to Western Areas minorities. Before the announcement, the company had got acceptance of the offer from JCI, which would see Gold Fields upping its stake from just over 18% to 34.7%, with the option to take this up to 41%. With Resource Investor.
