| Fri 27 Oct 2006, 17:24 | | Gold Fields - Financial effects and withdrawal of |
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GFI
GOGOF
Gold Fields - Financial effects and withdrawal of cautionary
Gold Fields Limited
(Reg. No.1968/004880/06)
(Incorporated in the Republic of South Africa)
JSE Share Code: GFI
NYSE Share Code: GFI
ISIN Code: ZAE000018123
("Gold Fields" or the "Company")
Financial effects following the barrick transaction and the Western Areas
transaction and withdrawal of cautionary
1. INTRODUCTION
Shareholders are referred to the announcements dated 11 September 2006
in which Gold Fields announced its intention to acquire from Barrick
Gold Corporation, through the acquisition of its wholly owned
subsidiary Barrick Gold South Africa (Proprietary) Limited, its 50%
interest in South Deep Gold Mine ("South Deep") (the "Barrick
Transaction"). Gold Fields also announced its intention to make an
offer to acquire the entire issued share capital of Western Areas
Limited other than those already held by Gold Fields and JCI Limited
(the "Western Areas Transaction").
2. PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects below are included for the
purposes of illustrating the effect of the Barrick Transaction and the
Western Areas Transaction on Gold Fields" earnings, headline earnings
and net asset value (NAV) per share. The directors of the Company are
responsible for the unaudited pro forma financial effects below. These
unaudited pro forma financial effects are presented for illustrative
purposes only and because of their nature may not give a fair
reflection of the Company"s financial position and results of
operations after the Barrick Transaction and Western Areas
Transaction. In particular, the pro forma earnings of Gold Fields are
significantly dilutive after taking account of the transactions since
South Deep as a mine is in a build up phase.
Pro forma financial effects of the Transactions on Gold Fields
Before (1) After the Percentage After the Percentage
Barrick Change the Barrick Change (7)
Transaction Transaction
(2) and Western
Areas
Transaction
(3)
Earnings 281 153 (46%) 116 (59%)
per share
(4)
Headline 270 143 (47%) 64 (76%)
earnings
per share
(4)
Net asset 3,703 4,043 9% 5,019 36%
value per
share (5)
Tangible 3,703 4,043 9% 5,019 36%
net asset
value per
share (5)
Number of 494,824,723 512,926,297 556,795,925
shares in
issue (6)
Weighted 492,922,941 511,024,515 554,894,143
average
number of
shares in
issue (6)
Notes:
(1) Extracted from the audited consolidated financial statements of Gold
Fields for the year ended 30 June 2006.
(2) Pro forma financial effects after the Barrick Transaction. South
Deep"s financial information is based on the unaudited management
accounts for the twelve months to 30 June 2006.
(3) Pro forma financial effects after the Barrick Transaction and Western
Areas Transaction. The financial information of Western Areas is based
on the unaudited published quarterly information of Western Areas for
the twelve months to 30 June 2006. The calculation of the financial
effects assumes 100% ownership of Western Areas.
(4) In relation to the pro forma earnings and headline earnings it is
assumed that:
The Barrick and Western Areas Transactions were effective on 1 July
2005;
Interest of R506 million has been provided on the loan of R8.916
billion (US$1.2 billion) raised in connection with the Barrick
Transaction, based on LIBOR plus a margin and an exchange rate of
R7.43/US$;
Additional amortisation of R340 million has been raised on the fair
value adjustment of South Deep. The adjustment is determined on a
units-of-production method based on South Deep"s gold production for
the twelve months to 30 June 2006 and reserves at 1 July 2005. The
mineral reserves at 1 July 2005 are based on South Deep mineral
reserves as published in the 2005 annual report of Western Areas, with
gold production in the last half of calendar 2005 added back. As a
consequence of this amortisation, a deferred tax credit of R119
million is released on the deferred tax asset recognised on the fair
value adjustment on the Barrick Transaction;
Gold Fields" existing interest in Western Areas is fair valued based
on the current estimated fair value of South Deep. The difference
between the purchase price paid by Gold Fields to acquire its existing
interest in Western Areas and its share of the estimated fair value of
Western Areas has been accounted for as negative goodwill, immediately
within earnings; and
Normal taxation expected to be applicable has been applied.
(5) In relation to the net asset values it is assumed that:
a) The net asset values are adjusted to reflect the Barrick Transaction
and the Western Areas Transaction had they been effective on 30 June
2006;
b) The purchase consideration for the Barrick Transaction of R11.3
billion (US$1.525 billion) consists of R8.916 billion (US$1.2 billion)
cash and R2.415 billion ($325 billion) in Gold Fields" shares.
c) Gold Fields accounts for assets acquired and liabilities assumed at
fair value. In accounting for the net assets acquired from Barrick,
Gold Fields accounts for 100 per cent of South Deep on the basis that
it has control of the Barrick Gold Western Areas Joint Venture. On
acquisition of the entire share capital of Western Areas, the
difference between the fair value of Western Areas and the purchase
consideration paid is accounted for in terms of transactions with
minorities i.e. any gains and losses arising from transaction with
minorities are treated as a transaction with shareholders and included
in equity and not earnings.
d) Gold Fields" existing interest in Western Areas is fair valued based
on the current estimated fair value of South Deep. The difference
between the purchase price paid by Gold Fields to acquire its existing
interest in Western Areas and its share of the estimated fair value of
Western Areas has been accounted for as negative goodwill, immediately
within earnings.
(6) Gold Fields share price of R133.40 is used to determine the number of
shares issued as consideration for the Barrick Transaction and the
fair value of the purchase consideration for the Western Areas
Transaction.
(7) Pro forma financial effects after the Barrick Transaction and Western
Areas Transaction.
3. WITHDRAWAL OF CAUTIONARY
Shareholders are advised that the cautionary announcements published
on 11 September 2006 are hereby withdrawn and caution is no longer
required to be exercised by shareholders when dealing in the Company"s
securities.
4. WESTERN AREAS OFFER DOCUMENT
Shareholders are advised that the offer document in respect of the
Western Areas Transaction will be posted to shareholders of Western
Areas on Monday, 30 October 2006.
Parktown
27 October 2006
Sponsor
J.P. Morgan Equities Limited
Date: 27/10/2006 05:24:28 PM Produced by the JSE SENS Department
