By Adam Aljewicz and Angus Macmillan
Of DOW JONES NEWSWIRES
JOHANNESBURG (Dow Jones)--Taking advantage of a bullish gold market, South Africa's Gold Fields Ltd. said Tuesday it's considering an international share placement which could be used for funding its existing projects in Ghana and Australia, or future offshore growth opportunities.
The equity offering of approximately 12-15 million new shares will be made to international institutional investors, and could raise as much as $195 million.
"It's opportunistic," said Leon Esterhuizen, an analyst at Investec, "but not unexpected and could be a sign of something big to come as a capital raising will add more firepower to their relatively strong balance sheet."
The share offering - which is not open to the investing public - would dilute Gold Fields' issued capital by about 2.5% to 3%.
Gold Fields' shares fell on the news, closing ZAR3.52 ($1=ZAR6.93), or 3.7%, lower at ZAR90.99 in a declining gold share market.
"I would think they're probably looking at the feasibility of their existing assets, such as St. Ives (in Australia) and possibly Tarkwa (in Ghana), but I wouldn't put it past them to look for an acquisition," said Dave Davis, analyst at Andisa Securities in Johannesburg.
The timing of a possible share placement comes amid a rapid, if bumpy, appreciation of Gold Fields' shares. The company's stock is currently 37% higher than it was in April and analysts view its current valuation as pricey.
A strong advance in the gold price has underpinned the rally. In the past three months, gold has jumped more than 7% to above $390 an ounce at the end of October.
Gold Fields' net cash position was $133 million at the end of June, compared to net debt of $68 million at the end of September.
But, its balance sheet should be buttressed by around $570 million, Investec's Esterhuizen says, when the company - heeding new South African legislation - sells 15% of its South African assetsto black-controlled consortium that includes mining company Mvelaphanda Holdings Ltd.
However, a large portion of that cash would have to spent in South Africa or Africa to adhere to domestic exchange-control rules.
At last week's September-quarter results presentation, Chief Executive Ian Cockerill said the group favored organic and exploration growth ahead of acquisitions.
Acquisitions, at the moment, are prohibitive, he said.
"Dollar-priced gold assets around the world are expensive factoring in a gold price of around $450 an ounce," Cockerill said.
Spot gold was trading around $379.50 an ounce in late European trading Tuesday.
Gold Fields' last major acquisition was in September 2001 when it paid $232 million, plus a royalty, for WMC Ltd.'s Agnew and St. Ives gold operations in Western Australia. While the acquisition bolstered Gold Fields production profile to around 4.4 million ounces, St. Ives is said to require a cash injection to modernize operations.
"Before they go on the acquisition trail they probably need to finance an upgrade at St. Ives," said Andisa's Davis.
Gold Fields filed for a previous share offering after listing on the New York Stock Exchange May 9, 2002, but it withdrew the new issue citing other demands on the company.
The original share offering was supposed to raise capital for a possible reduction in debt, the development of its Tarkwa gold mine in Ghana, and its Arctic Platinum joint venture with Finland's Outokumpu Oyj. (Y.OUT).
J.P. Morgan Securities Ltd. has been hired to lead manage the possible placement.
Company Web site: http://www.goldfields.co.za
-By Adam Aljewicz and Angus Macmillan, Dow Jones Newswires; +27 11 783 7848, [email protected]
(END) Dow Jones Newswires
11-04-03 1215ET
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