The world’s fourth-largest gold producer, Gold Fields, has not
discounted South Africa as a source of the yellow metal as it
positions itself to produce 1,5-million additional ounces of gold a
year by 2009.
CEO Ian Cockerill told analysts and the media at the company’s open
day on Tuesday that he would devote scarce investment dollars to
areas that he believed could make a sustainable contribution.
This reasoning was also behind Gold Field’s recent decision to
acquire 15,5% of local miner Western Areas, which has, as its only
asset, a 50% share of the high-potential South Deep mine.
Cockerill admitted that the move was motivated by a desire for a
“seat at the table” when the mine’s future was decided
– South Deep was owned jointly by Western Areas and mining giant
Barrick and operated by Barrick, which recently purchased the asset
as part of its acquisition of Placer Dome.
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He said that Gold Field’s Kloof mine, which adjoined Western Areas
on the Far West Rand, could, conceivably, be employed to accelerate
development of South Deep phase two.
The South Deep orebody was not being mined to its full extent and
production had been further hampered by a recent
skip-down-the-shaft incident, which was likely to knock the
operation out for 9 to 12 months.
Cockerill continued to emphasise that it would seek cooperation
with all participants, including arch rival Harmony, which made an
unsuccessful bid for Gold Fields in 2004 and which had bought a 29%
interest in Western Arevertical impact glass crusher designas.
But beyond South Deep, Gold Fields remained sanguine about growth
prospects in South Africa, despite the fact that most of its recent
acquisition and development activity had been heavily weighted
towards so-called ‚international ounces‘.
The company, which sees around three-million trades a day, said
that 41% of its shareholding was held by South Africans. Its
largest individual shareholder was the Public Investment
Corporation – which invested funds on behalf of South African
public servants – which was followed by large London-based
funds.
Cockerill made the point that the list of iron ore crushers in jharkhandshares were liquid, with about
$60-million a day changing hands.
“This is not a lobster pot investment.”
By 2009, Gold Fields planned to have added an additional
1,5-million ounces to its production. Based on investment already
made it would be about 600 000 oz short of this target.
Nonetheless, Cockerill was confident that it can reach this target,
which would take the miner to between 2,5-million and 2,8-million
ounces a year.
To fund further expansion, CFO Nick Holland pointed out, it would
be able to raise debt of between $400-million and $500-million. In
addition, itdiamond grinding toolss operations generate cash of about $400-million a
year. As a result, it would be able to raise anywhere between
$600-million and a billion dollars if needed. It could also turn to
the equity markets, if needed, but this would be a last
resort.
Cockerill said that the miner’s stated aim was to have a portfolio
of a few, large, high-quality assets. Consequently, it could afford
a proliferation of small assets, and was positioning itself instead
for ‚Gold Fields‘ sized operations globally.
Executive VP of corporate development John Munro said that
discoveries of new gold deposits worldwide were tapering off.
He argued that, given its robust production outlook, it could be
more picky than its peers when it came to ounce replacement. In
addition, its strategy was not to become as big for the sake of
size, as it believed that this did not add value on a per share
level.
In a period of about two-and-a-half years, it has analysed over 1
500 deposits, which it has also ranked.
This led it to the conclusion that it should focus on expanding
into deposits that were porphyry, epithermal and sedimentary in
nature.
Gold-belt analysis worldwide has further defined areas in which it
should focus.
It has also rated these areas in terms of political stability in
the countries in which they are found.
As such, it is currently focusing on Ghana, South Africa,
Australia, Peru and Venezuela.
On the longer-term horizon were countries such as China, the
Dominican Republic, Russia and the Democratic Republic of
Congo.
Countries that it would not immediately target were Colombia,
Bolivia and Zimbabwe.
Some of the projects currently under way included Cerro Corona, in
Peru, and Essakane, in Burkina Faso.
It had active exploration projects in North America, South America,
Africa, Asia as well as Australia.
Gold Fields is currently in its third phase of growth and is in
transition to become a global player.
Its first phase saw it start life with four South African mines; at
that stage this included St Helena.
Gold Field’s second stage saw it becoming multinational as it
acquired the Ghana assets and WMC’s gold assets. Subsequently, as
it moved into its third stage, it acquired South American
assets.