ASX-listed AngloGold Ashanti and Gold Fields have linked up for a proposed joint venture (JV) in Ghana, which begs the question: Is a full-scale merger on the cards?
The JV looks to consolidate Gold Fields’ Tarkwa operation with AngloGold’s nearby Iduapriem mine, creating the largest gold mine in Africa.
Gold Fields would operate the incorporated JV, which would sit under the banner of Gold Fields Ghana. AngloGold would contribute its 100 per cent interest in Iduapriem in exchange for a shareholding in Gold Fields Ghana.
Gold Fields would own 66.7 per cent of the JV, with AngloGold owning the remaining 33.3 per cent.
With mergers and acquisitions (M&A) seemingly running rife in the gold mining industry as companies look to strategically synergise and limit capital pressures, both companies were asked whether a merger would eventuate from the JV.
“We are in similar places around the world, but for now this is the thing we are focused on,” AngloGold chief executive officer (CEO) Alberto Calderon told reporters following the JV announcement.
“We’re not going to entertain any speculation on that (a merger). There’s no conversation or anything of that sort.”
Gold Fields, which last year failed in its bid to acquire Yamana Gold, is no longer interested in big M&A deals, with interim CEO Martin Preece highlighting a new inorganic growth pathway.
“Collaboration is easier,” he said on a conference call following the JV announcement. “I think it’s going to be asset-specific and opportunity-specific.”
Combining Tarkwa and Iduapriem would unlock almost 900,000 ounces of annual gold production over the first five years, with an estimated mine life of at least 18 years.
“The proposed joint venture is an exciting opportunity to combine mining operations that are essentially part of the same mineral deposit and is something that Gold Fields and AngloGold Ashanti have discussed many times before over the years,” Preece said in a press announcement.
“The ability to optimise mining and the use of shared infrastructure across the combined operation will result in significant flexibility in mine planning, materially enhancing the economics of the mine and ensuring quality and scale of operation that will be world class.”
Calderon said the combination would put together “two parts of the same world-class orebody”.
“By creating one of the world’s largest open-pit gold operations, in a pre-eminent mining jurisdiction, we will create longer-term value not only for AngloGold Ashanti and Gold Fields, but for the combined stakeholders in our local host communities and for all of Ghana,” Calderon said in a press announcement.
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