Gold Fields and AngloGold Ashanti agree to terms for JV in Ghana

A proposed joint venture between Gold Fields’ (NYSE: GFI) Tarkwa and AngloGold Ashanti’s (NYSE: AU) Iduapriem mines in Ghana would create Africa’s largest gold mine and one of the world’s biggest open-pit gold operations.

In a joint news release Thursday, the companies said they have agreed to key terms of a JV that would see the neighbouring mines producing a total of nearly 900,000 oz. gold from a combined operation during the first five years and average more than 600,000 oz. annually over an estimated 18-year-mine life.

Gold Fields owns a 90% stake in Tarkwa, with the government of Ghana owning the remaining 10%, and AngloGold Ashanti owns 100% of the Iduapriem mine. Excluding the interest held by Ghana’s government, Gold Fields would have a 66.7% stake, or two-thirds, of the proposed JV, and AngloGold a 33% stake, or one-third.

The firms estimate all-in-sustaining costs (AISC) in 2023 terms of less than US$1,000 per oz. during the first five years and less than US$1,200 per oz. over the estimated life of the operation. They also noted that they expect the JV’s ore reserves will exceed the sum of the ore reserves for the stand-alone operations due to the anticipated operating synergies.

“The proposed joint venture is an exciting opportunity to combine mining operations that are essentially part of the same mineral deposit and is something that Gold Fields and AngloGold Ashanti have discussed many times before over the years,” Gold Fields interim CEO, Martin Preece, said in the release.

“The ability to optimize mining and the use of shared infrastructure across the combined operation will result in significant flexibility in mine planning, materially enhancing the economics of the mine and ensuring quality and scale of operation that will be world-class.”

Alberto Calderon, AngloGold Ashanti’s CEO, noted that the combination “puts together two parts of the same world-class ore body, allowing us to share skills and infrastructure to significantly enhance every aspect of this mining operation, from exploration and planning, to mining and processing.”

Last year Tarkwa produced 531,600 oz. gold at AISCs of US$1,248 per ounce. Iduapriem produced 248,000 oz. in 2022 at AISCs of US$1,299 per ounce. Commenting on the agreement, Colin Hamilton, a mining analyst at BMO Capital Markets, said he sees the proposed JV “as part of a broader industry trend to consolidate gold assets to enhance business efficiency as shareholder pressure to better manage costs grows.”