South Africa's Gold Fields ties up with Canada's Asanko in Ghana (updated)

Galiano Gold

29/03/2018 10:36

(Adds details, share price reaction)
    JOHANNESBURG, March 29 (Reuters) - South Africa's Gold
Fields  GFIJ.J  will buy a near 50 percent share of Asanko Gold
Inc's  AKG.TO  Ghana subsidiary and take a stake in the Canadian
miner in a $202.6 million deal announced on Thursday.
    Investors were cautious, questioning whether the African
joint venture would make a return any time soon and sending Gold
Fields' shares down nearly 6 percent, in an already weak bullion
sector.
    Gold Fields said in a statement that as well as acquiring
half of Asanko Gold Ghana's 90 percent interest in the Asanko
Gold Mine, its Ghana subsidiary will also acquire associated
properties and exploration rights in the African country.
    Shares in Goldfields fell more than the broader bullion
sector  .JGLDX  - which was down 2.8 percent - tumbling 5.9
percent to 46.01 rand by 0858 GMT. 
    "There's always some execution risk, they are buying these
things but can they actually make money out of it, is what the
market is asking," said Cratos Capital equities trader Greg
Davies.  
    The deal includes an upfront payment of $165 million on
closure of the transaction and a deferred payment of $20
million. Gold Fields' subsidiary will also take a 9.9 percent
stake in Toronto-listed Asanko for $17.6 million in a share
placement. 
    The South African miner said the $203 million deal fitted in
with its strategy to improve its portfolio by lowering all-in
costs and extending mines' lifespans to enhance cash generation.
    Asanko, which is expected to produce 253,000 ounces of gold
annually from 2019 to 2023 with a life-of-mine of at least 15
years, also has the potential to make further discoveries, Gold
Fields said.
    "The Asanko joint venture will give immediate access to low
cost production ounces, increasing the quality of the Gold
Fields' portfolio," the South African miner said. 

 (Reporting by Tanisha Heiberg and Nqobile Dludla
Editing by Susan Fenton)
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