Gold Fields acquires 40% stake in Benguet gold project

MANILA, Philippines – Gold Fields Ltd. has acquired a 40-percent interest in the Far Southeast project in the province of Benguet by making a $110 million down-payment.

In a statement yesterday, Gold Fields said that it paid $110 million to Liberty Express Assets to exercise its option to acquire a 40 percent stake in the project under an agreement signed with the latter.

In September 2010, Gold Fields entered into two option agreements, one with Liberty Express which has a 40 percent stake in the Far Southeast project, and the other with Lepanto Consolidated Mining Co. which owns 60 percent, to buy 60 percent of the project for a total consideration of $340 million.

By entering into the option agreement, Gold Fields made its first down payment for the acquisition comprising $10 million in option fees to Lepanto and $44 million to Liberty in that same month.

In September last year, Gold Fields made the second down payment of $66 million for the acquisition.

To bring its total interest in the Far Southeast project to 60 percent, Gold Fields has to acquire an additional 20 percent stake by paying another $110 million to Lepanto.

Gold Fields said that it expects to exercise the option to acquire an additional 20 percent stake when the financial or technical assistance agreement (FTAA) application for the project is granted by the government in the second-half of the year.

The FTAA, a license which will allow a foreign corporation to legally own and control a majority stake in large-scale mineral resources in the Philippines, is a necessary condition for Gold Fields to exercise the option to bring its total interest in the project to 60 percent.

Lepanto filed an application for the grant of FTAA for the Far Southeast project in November last year.

“Gold Fields recognizes the positive results of the ongoing due diligence studies in the Far Southeast project. Our acquisition of the 40 percent stake, pursuant to the terms of the agreement, reflects our commitment to the project, the Philippines and the host community,” Nick Holland, Gold Fields chief executive officer said.

 “Gold Fields looks forward to the acquisition of the remaining 20 percent stake upon the issuance of the FTAA,” he said further.

Gold Fields is one of the world’s fourth biggest gold producer. It operates mines in South Africa, Peru, Ghana and Australia.