| Thu 27 Aug 2009, 12:00 | | GFI Gold Fields Limited - Gold Fields Terminates Royalty Over St Ives |
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GFI
GOGOF
GFI Gold Fields Limited - Gold Fields Terminates Royalty Over St Ives
Gold Fields Limited
(Reg. No. 1968/004880/06)
(Incorporated in the Republic of South Africa)
("Gold Fields" or "the Company")
JSE, NYSE, NASDAQ Dubai - Share Code: GFI
NYX Code: GFLB, and SWX Code: GOLI
ISIN: ZAE000018123
MEDIA RELEASE
GOLD FIELDS TERMINATES ROYALTY OVER ST IVES
Johannesburg, 27 August 2009: Gold Fields Limited (Gold Fields) (JSE, NYSE,
NASDAQ Dubai: GFI) is pleased to announce that an Agreement has been executed
in terms of which the royalty payable by Gold Fields` wholly owned Australian
subsidiary, St Ives Gold Mining Company Pty Ltd (St Ives) to Morgan Stanley
Bank`s subsidiaries, (Royalty) has been terminated for a consideration of
A$308 million.
When Gold Fields acquired St Ives in late 2001, the total consideration
included the Royalty, which was subsequently acquired by subsidiaries of
Morgan Stanley Bank. The Royalty comprises two parts (i) a payment equal to
4% of the revenue from all future gold produced by St Ives; and (ii) provided
that the gold price exceeds A$600/oz, a payment equal to 10% of the revenue
difference between the spot gold price expressed in Australian dollars per
ounce and a price of A$600/oz calculated on all future ounces produced by St
Ives. Both components of the Royalty are payable on all future production
from St Ives and thus represent an uncapped liability.
The punitive impact of the Royalty on the costs of St Ives, which equates to
approximately A$100 per ounce at current gold prices, have become clear over
the past year, both in terms of its adverse impact on the operating margin of
the mine, as well as St Ives` ability to convert further ounces into
Reserves.
With the very exciting Athena and Hamlet projects progressing well towards
development and the historic success of St Ives in consistently replacing
depleted ounces, terminating the Royalty became an imperative to Gold Fields.
At current gold prices, St Ives will only have to produce a further 700,000
ounces over and above the Reserves of some 2.3 million ounces to justify the
termination fee on an undiscounted basis. Gold Fields does not envisage any
difficulty in achieving this production level, especially in light of the
fact that as at 30 June 2009, St Ives had SAMREC compliant Reserves of some
2.3 million ounces and a total Resource of 5.6 million ounces. In addition,
the Athena/Hamlet camp alone, which continues to grow, contains an inventory
of over 2.2 million ounces of which only 0.4 Million ounces are in Reserve
and 1,0 million ounces are in Resource. In addition, based on current
economic parameters, the reduction of costs associated with the termination
of the Royalty will lead to an estimated 220,000 ounces of the existing
Resource converting to Reserve.
The termination of the Royalty represents an investment in the reduction of
costs and at current gold prices and envisaged production levels, the pay
back on this investment will only be about five years.
Nick Holland, Chief Executive Officer of Gold Fields, said: "This transaction
positively transforms the cost profile of St. Ives, placing it firmly within
the bottom half of the Australian gold cost curve, and allowing this
operation to benefit fully from the higher gold price. St Ives, with its
proven ability to replace reserves through discovery, continues to be of
significant strategic importance to Gold Fields, and our cornerstone
operation in the Australasia Region. To this end, the investment in
terminating the Royalty is not only value accretive for shareholders in that
it offers immediate significant cash flows to St Ives, but is absolutely
essential to the Gold Fields group in light of the future prospects of the
region."
The transaction has been financed from cash resources and available
facilities and closed on 26 August 2009.
ends
Certain statements in this announcement constitute "forward looking
statements" within the meaning of Section 27A of the US Securities Act of
1933 and Section 21E of the US Securities Exchange Act of 1934. Such forward
looking statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance or
achievements of the company to be materially different from the future
results, performance or achievements expressed or implied by such forward
looking statements. Such risks, uncertainties and other important factors
include among others, economic, business and political conditions in
Australia, the ability to achieve anticipated efficiencies and other cost
savings in connection with the announced transaction, decreases in the market
price of gold, hazards associated with underground and surface gold mining,
currency devaluations, inflation other macro-economic factors, industrial
action and temporary stoppages of mines for safety reasons. These forward
looking statements speak only as of the date of this announcement. The
company undertakes no obligation to update publicly or release any revisions
to these forward looking statements to reflect events or circumstances after
the date of this announcement or to reflect the occurrence of unanticipated
events."
About Gold Fields
Gold Fields Limited is one of the world`s largest unhedged producers of gold
with attributable steady state production of approximately 3.6 million ounces
per annum from nine operating mines in South Africa, Peru, Ghana and
Australia. The company has total attributable ore reserves of 83 million
ounces and mineral resources of 251 million ounces. Gold Fields is listed on
the JSE Limited (primary listing), New York Stock Exchange (NYSE), NASDAQ
Dubai Limited (NASDAQ Dubai), NYSE Euronext in Brussels (NYX) and Swiss
Exchange (SWX). For more information please visit the Gold Fields website at
www.goldfields.co.za.
SAMREC
The Mineral Reserves and Mineral Resources comply with the SAMREC code. The
competent person, Mr MK Jolly, has approved the contents of this announcement
in writing.
Gold Fields Limited
Reg. 1968/004880/06
150 Helen Road,
Sandown, Sandton,
2196
Postnet Suite 252
Private Bag X30500
Houghton, 2041
South Africa
Tel +27 11 562-9700
Fax +27 11 562-9838
www.goldfields.co.za
Enquiries
Media and Investor Enquiries
Willie Jacobsz
Tel +508 839-1188
Mobile +857 241-7127
email Willie.Jacobsz@gfexpl.com
Nikki Catrakilis-Wagner
Tel +27 11 562-9706
Mobile +27 (0) 83 309-6720
email Nikki.Catrakilis-Wagner@
goldfields.co.za
Media Enquiries
Julian Gwillim
Tel +27 11 562-9774
Mobile +27 (0) 82 452 4389
email Julian.Gwillim@goldfields.co.za
Sponsor:
J.P. Morgan Equities Limited
Date: 27/08/2009 12:00:02 Produced by the JSE SENS Department.
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