For a total consideration of US$170 million, Gold Fields Limited has announced that it has sold its 45% stake in the Asanko gold mine in Ghana to joint venture partner Galiano Gold, which is listed on the TSX.
In addition, Gold Fields will be paid a 1% net smelter royalty on any future production from the mine’s main deposit, the Nkran deposit.
At the moment, Gold Fields and Galiano Gold each own 45% of the Asanko mine, which is run by Galiano. The remaining 10% is owned by the Ghanaian government.
Galiano and Gold Fields will settle the transaction using a mix of upfront, deferred, and contingent consideration as follows:
- US$85m which will be settled with US$65m in cash and US$20m in Galiano shares on completion of the transaction;
- US$25m to be paid on 31 December 2025;
- US$30m to be paid on 31 December 2026;
- US$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.
As of right now, Gold Fields owns 9.8% of Galiano; however, the share purchase agreement caps the amount of shares that Gold Fields can acquire to 19.9%. In the event that Galiano’s share market value falls short of the required US$20 million, Galiano will provide an extra cash payment to make up the shortfall.
The interim CEO of Gold Fields, Martin Preece, says of the divestment, “We are happy to have reached this agreement with Galiano.” It is evident that consolidated ownership is necessary for the Asanko mine to follow the committed path forward. In order to maximize its chances of success, Gold Fields is happy to realize value for its holdings now, while also giving Galiano flexibility in the mine’s recapitalization and restarting mining.
“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 completion of the current transaction is anticipated in the first quarter of 2024, subject to several requirements, including regulatory approvals.
