JOHANNESBURG (Dow Jones)--Gold Fields Ltd. (GFI) Friday made its first foray into South America by acquiring 92% of Sociedad Minera La Cima SA.
South Africa-based Gold Fields, the world's fourth largest gold producer, currently produces around 4.3 million ounces of gold a year from its mines in South Africa, Australia and Ghana. Its mainstay is its deep-level South Africa mines.
But it and other South African-based miners, such as AngloGold Ltd. (AU) and Harmony Gold Mining Co Ltd. (HMY), are increasingly turning to shallower mines in other countries to diversify their geographic, currency and ore-body risk.
South Africa's new mining legislation requiring local assets to be 15% black-owned by 2007 and 26% black-owned by 2012 is another factor driving the companies' quest to develop foreign gold operations.
Gold Fields is in the process of selling 15% of its South African asset base to a black consortium for more than 4.0 billion rand ($1=ZAR6.7151).
Sociedad Miner La Cima is the owner of the Cerro Cerona gold and copper project in Peru, and Gold Fields Executive Director John Munro is confident the deal will proceed early next year.
"The price has not yet been announced as we still have to negotiate with other shareholders," he said.
"Cerro Cerona would give us a valuable foothold in South America, one of the world's most highly prospective gold exploration areas," he said.
As the deal is essentially an off-market transaction with a family-controlled company, the price Gold Fields is paying is expected to be on lower earnings multiples than if it were acquiring a listed company.
Munro said the open pit project, on which a feasibility study was recently completed, "should be fairly easy to develop" and could be in production within two years at an annual rate of 147,000 ounces of gold and 65 million pounds of copper.
He said this would equate to a gold mine producing around 280,000 ounces of gold annually, similar in size to Gold Fields' Damang mine in Ghana.
Munro said Gold Fields is involved in other "exploration plays" in South America, but is also making progress with building its gold exploration portfolio in China, central Asia, Ghana and Tanzania.
Leon Esterhuizen, gold analyst at Investec Securities, described the Cerro Cerona transaction as "the right thing for Gold Fields to do.
"The more they can diversify outside of South Africa, the better to avert the risk factor of being too reliant on one country," he said.
At 1025 GMT, Gold Fields shares were up 2%, or ZAR1.69, at ZAR85.70 a share, well off the 12-month peak of ZAR130 reached in January.
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
