Why Gold Fields’s bid has the market all aflutter
Investors fear overspending and share price sinks on news that the company will bid for half of Asanko Gold Ghana and a 9.9% stake in its parent
The market on Thursday took most of the session to digest the news that Gold Fields was making a R2.4bn offer for half ownership of a mining operation in Ghana and taking a 9.9% stake in Asanko, the Canadian parent company. Gold Fields shares were deep in the red for most of the day as the market fretted that the mining company was going to spend that much money at a time when its capital bill for 2018 stood at $830m, with two large projects under way at Damang in Ghana and Gruyere in Australia. By the close, Gold Fields, with a R39.5bn capitalisation, was 1.9% down, off the session low of more than 5% below Wednesday’s closing price. Gold Fields CEO Nick Holland stressed that the deal was affordable and that the Asanko mining project, 100km north of its two mines at Damang and Tarkwa, needed no more capital to move into production of 250,000oz a year at an all-in sustaining cost of $860/oz. The transaction would in no way affect the Damang and Gruyere projects, and Gold Fields had ...
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