Gold Fields, Sino now allies

Already holding a significant stake in Australian gold producer Sino Gold (SGX-A), South African mining house Gold Fields (GFI-N, GOF-L, GOGOF-J) has taken a 6.5-million-share placement in exchange for an alliance between the companies.

Gold Fields gets its shares at A$5.58 per share for a total of A$36.3 million (about $32 million). It will hold 27.7 million shares, representing 17.4% of the junior.

Sino Gold, which owns the Jianchaling gold mine in Shaanxi province and is developing the Jinfeng mine in Guizhou province, will integrate Gold Fields’ China-based staff with its own and, under the alliance agreement, will operate an equally funded joint venture to explore for gold deposits that meet Gold Fields’ development criteria (currently a 5-million-oz. resource with potential annual production of 500,000 oz.). If the joint venture finds something smaller, Sino Gold will have the right to develop it.

Gold Fields’ existing Chinese assets, in the northeast and southeast, will be folded into the joint venture for a price yet to be determined. Sino Gold will retain full ownership of properties around Jinfeng and around another project, White Mountain, in the northeastern province of Jilin.

Meanwhile, another Gold Fields acquisition, this time in South Africa, cleared a regulatory hurdle. The proposed takeover of Western Areas (WARJF-O, WAR-J), owner of the South Deeps mine, has been approved by the Competition Tribunal of the South African government. The approval represents the final condition Gold Fields had placed on the transaction. Concurrent with the takeover, Barrick Gold (ABX-T, ABX-N) has sold its half of South Deeps to Gold Fields for US$1.2 billion cash and 18.7 million Gold Fields shares.