Nick Evans, The West Australian August 22, 2013, 2:59 pm
South Africa’s Gold Fields has emerged as the buyer of Barrick’s South Yilgarn mines north east of Perth, agreeing to pay $US300 million for the Canadian gold mining giant's Granny Smith, Lawlers and Darlot mines.
Barrick put the assets on the market in April, as it struggled with costs and operating margins at the mines, amidst a plunging gold price.
When added to the approximately 600,000oz gold production of Gold Fields existing WA mines, St Ives and Agnew, production from the South Yilgarn mines will push Gold Fields WA production to more than a million ounces a year.
Gold Fields said this afternoon it would pay $US300 million for the mines, less up to $US30 million in working capital adjustments.
Up to half of the payment could come in Gold Fields scrip, the company said.
With the Lawlers mine sitting adjacent to Agnew, Gold Fields chief executive Nick Holland said the consolidation of the two operations would provide significant long-term benefits to the company.
Gold Fields chief executive Nick Holland described the deal as an attractive, opportunistic, and conservatively financed acquisition which was consistent with the company's strategy and focus.
"We see a clear path to value and, once fully integrated, these assets are expected to have a positive impact on Gold Fields’ production, free cash flow and global credit rating,” he said in a statement.
Mr Holland described consolidation and cost synergies from the combined operations but made no immediate comments on possible job losses.
“Our first priority after closing the deal is to determine the most appropriate way forward for each asset in our endeavour to maximise cash flow," he said.
"We expect that it will take between six and 12 months to realise the full benefits of the acquisition.”
Barrick’s president and chief executive Jamie Sokalsky said the agreement to divest Yilgarn South demonstrated further progress as the company worked to optimise its portfolio and maximize free cash flow in line with a disciplined approach to capital allocation.
“I’d like to extend my gratitude and appreciation to our Yilgarn South employees, who have made a significant contribution to Barrick over many years,” he said.
