Gold Fields Limited has announced its decision to divest its 45 percent shareholding in the Asanko Gold Mine to TSX-listed joint venture partner Galiano Gold.
The total consideration for the transaction amounts to US$170 million. Additionally, Gold Fields will receive a one percent net smelter royalty on future production from the main deposit at Nkran in the Western Region.
The Asanko Mine was a joint venture with Gold Fields and Galiano Gold each owning 45 percent shares, while the Government of Ghana held the remaining 10 percent. Galiano Gold was responsible for managing the mine.
The settlement of the transaction involves an upfront payment, deferred payments, and contingent considerations. The upfront payment of US$85 million will be settled with US$65 million in cash and US$20 million in Galiano shares upon completion of the deal.
Martin Preece, the Interim Chief Executive Officer of Gold Fields, provided the breakdown of the payments in a press release sent to the Ghana News Agency.
“US$25 million on 31 December 2025; US$30 million on 31 December 2026; and US$30 million plus a one per cent net smelter royalty to be paid, once more than 100,000 ounces of gold equivalent is produced from the Nkran deposit”.
He said, “The royalty is capped at a volume of 447, 000 ounces”.
Gold Mine, Gold Fields now holds a 9.8 percent shareholding in Galiano Gold. The share purchase agreement stipulates that Gold Fields’ shareholding in Galiano Gold cannot exceed 19.9 percent.
If the market value of Galiano shares falls short of the required US$20 million, Gold Fields will compensate the difference through an additional cash payment, as stated in the press release.
In response to the divestment, Mr. Preece commented: “We are pleased to have concluded this agreement with Galiano, and it is clear that the committed path forward for the Asanko Mine requires consolidated ownership”.
In order to maximize its chances of success, he stated that Gold Fields was happy to realize value for its holding at this time and to give Galiano flexibility in recapitalizing the Mine and starting mining again.
“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.”
The completion of the current transaction is anticipated in the first quarter of 2024, subject to a number of requirements, including regulatory approvals.