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Gold Fields gets green light in Ghana

Authorities in Ghana have approved the $185-million partnership between dual-listed Gold Fields and TSX-listed Asanko Gold aimed at developing a new gold mine.

That transaction will see Gold Fields acquiring a 50% interest in the Vancouver-based company’s 90%-ownership of Asanko Gold Mine.

Once the deal is closed, which is expected to happen in early July 2018, Gold Fields’ local unit will subscribe to a 9.9% share placement in Asanko by way of a private placement of 22,354,657 Asanko shares at a price of approximately $0.79 cents.

Asanko Gold has said it intends to use the money to repay in full all outstanding principal and accrued interest ($164 million) owing to its lender, Red Kite.

Gold Fields, whose net debt stood at $1.3 billion at the end of its last financial year, says the deal fitted in with its growth strategy, focused on improving its portfolio by lowering all-in costs and extending mines’ lifespans to enhance cash generation.

It also mentioned it could fund the joint venture and the share subscription through cash and existing debt facilities.

The South African miner has $400 million in cash and another $1 billion in credit facility.

Asanko gold mine, located in Ghana’s Ashanti Region, has a 15-year mine life, but Asanko president and CEO, Peter Breese, has always spoken of expanding it.

In June, his company completed a bankable feasibility study regarding the expansion of the mine, which would increase production to some 230,000 oz of gold a year.

Asanko said at the time it would then hike annual gold output to 460,000 oz, possibly from 2022, spending a total of $200 million.

According to Gold Fields, its new business partner has the potential to make further discoveries.