At a price of $170 million, Gold Fields Limited sold TSX-listed joint venture partner Galiano Gold its 45% stake in the Asanko Gold Mine in Ghana.
In a statement, Gold Fields stated that it will also get a one percent net smelter royalty on any future output from the mine’s primary deposit, the Nkran deposit.
Galiano Gold manages the Asanko mine, and the Government of Ghana owns the remaining 10%. Currently, Gold Fields and Galiano Gold own 45 percent each of the mine.
According to the release, Galiano and Gold Fields will settle the deal using a mix of upfront, deferred, and contingent payment.
More information about the settlement structure was provided. It stated that, upon completion of the transaction, $85 million will be settled with US$65 million in cash and $20 million in Galiano shares;
$25 million will be paid on December 31, 2025; $30 million will be paid on December 31, 2026; and $30 million plus a one percent net smelter royalty will be paid once more than 100koz of gold equivalent is produced from the Nkran deposit.
According to the statement, there is a 447koz volume cap on the royalty.
As of right now, Gold Fields owns 9.8% of Galiano; however, the share purchase agreement caps the amount of shares that Gold Fields can increase to 19.9%.
According to the press release, Galiano plans to make up any shortfall in the required $20 million by making an extra cash payment.
“We are pleased to have concluded this agreement with Galiano,” stated Martin Preece, interim CEO of Gold Fields, in remarks regarding the divestment.
In order to maximize its chances of success, he continued, Gold Fields is happy to realize value for its holdings now while giving Galiano flexibility in the mine’s recapitalization and restarting mining.
