The proposed mega joint venture between Gold Fields and AngloGold Ashanti in Ghana, which will create Africa’s largest gold mine, has been cast in doubt as the West African government stalls the transaction, leaving the parties frustrated.
The deal, if it jumps Ghana’s regulatory hurdles, will bring together Gold Fields’ Tarkwa mine and AngloGold Ashanti’s Iduapriem mine, both of which are located near the town of Tarkwa in western Ghana.
In terms of the proposal, tabled with the government of Ghana in March 2023, Gold Fields will own 60% of the joint venture, AngloGold Ashanti 30% and the government 10%.
The benefits of the transaction, if approved, are almost immediate with higher combined production of 900,000oz at a cost of less than $1,000/oz over the first five years and the life-of-mine extended to 2038.
Gold Fields is looking to secure its future as production at its non-SA mines starts to decline in the coming decades, analysts have said.
Gold Fields previously said it hoped the Ghanaian government would make the call on the deal ahead of the October 2024 parliamentary recess, before the country heads to national elections in December 2024.
“The parties continue to believe that a combination of the two neighbouring mines into a single managed entity is compelling, given that it is anticipated to extend life of mine, increase production and lower costs, creating value for all stakeholders,” the companies, worth a combined R447bn on the JSE, said in a joint statement.
“Notwithstanding constructive engagement with the government of Ghana since the announcement of the proposed joint venture on March 16 2023, the requisite approvals by the government of Ghana for the proposed joint venture have not yet been obtained.”
Gold Fields’ asset base straddles Australia, Ghana, Chile and SA, while AngloGold no longer has mines in SA after it sold its last SA mining assets to Harmony Gold in 2020 for about R4.4bn.
While it no longer has any operations left in SA, it remains listed on the JSE despite moving its headquarters to London, and its primary listing to New York last year, while adding a secondary listing in Ghana.
The decision to move its primary listing from Johannesburg to New York was inspired by the group’s strategy to close the valuation gap between it and the largest North American and Australian mining houses.
Ghana, which long replaced SA as Africa’s largest gold producer, is heading to a general election on December 7. About 13 candidates, including incumbent vice-president Mahamudu Bawumia, will go toe to toe for the presidency.
The issue of the economy is likely to take centre stage in the polls. Bawumia, seen as the front-runner, has said he will, if elected, adopt a new exchange rate regime that links the cedi currency to gold.
The country produced just above 4 million ounces of gold last year.
Gold Fields operates two gold mines in Ghana’s Ashanti Gold Belt — Tarkwa and Damang — while AngloGold Ashanti also has two mines in the country, Iduapriem and Obuasi.
Gold Fields and AngloGold Ashanti said it would be business as usual at their Tarkwa and Iduapriem mines until the Ghana government made up its mind on the proposed tie-up.
“In the absence of the requisite approvals from the government of Ghana and clear timelines for execution of an agreement, Gold Fields and AngloGold Ashanti will maintain engagement in relation to a potential asset combination while separately continuing to pursue improvements to their respective assets,” they said.
“The parties will keep shareholders apprised of any significant developments pertaining to the proposed joint venture.”
While the Ghana deal drags, AngloGold Ashanti in September put $2.5bn on the table for the takeover of Centamin, owner of Egypt’s largest gold mine, in one of the biggest mining deals of the year as mergers and acquisition activity in the industry heats up.
The transaction will involve a stock and cash deal, which after its conclusion will see AngloGold Ashanti shareholders own about 83.6% of the group’s enlarged issued share capital, while Centamin will own 16.4%.
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