Tarkwa wipes US$75m debt

Gold Fields (GDFDY-O) and Golden Knight Resources (GKR-T) have eliminated US$75 million in debt related to the construction of the Tarkwa gold mine in southwestern Ghana.

The South African major, which owns a 70% interest in the mine, paid US$60 million to its operating subsidiary, Gold Fields Ghana, in conjunction with a US$15-million payment from Golden Knight Resources (GKR-T), which holds a 17.5% stake in the subsidiary.

Gold Fields Ghana will pay down the debt owed to a consortium of banks, including Chase Manhattan Bank, Dresdner Bank, Royal Bank of Scotland, and Standard Bank.

The transaction reduces Gold Fields’ debt to US$38 million.

Tarkwa entered production in May 1998 during the development stage. Gold Fields expects to lift annual production to 250,000 oz. at a cash cost of US$200 per oz., beginning in the third quarter of 1999.

Gold Fields Ghana retains access to a US$30-million loan facility, which will be used to complete the second phase of development.

For its portion of the debt restructuring, Golden Knight received a US$15-million loan from Repadre Capital (RPD-T). In February, the two companies agreed to a proposed merger. Golden Knight shareholders will vote on the merger in late April.

The government of Ghana holds a 10% carried interest in Tarkwa, with the remainder held by the Social Security and National Insurance Trust of Ghana.