Gold Fields scouts for $1.2bn cash top up

GOLD producer Gold Fields settled months of speculation about its capital needs with the announcement last week Thursday of plans to raise $1,2bn through a private placement of shares with institutions.
It is the largest private placement to date by a South African company.
Speculation about the group's need for cash has mounted after Gold Fields made its $2,5bn offer last year to buy out all the shareholders in the South Deep mine, which has suffered production problems and from a substantial forward sale of its gold production by previous management to finance development.
Gold Fields has taken the immediate decision to buy out the Western Areas hedge book.
Gold Fields chief financial officer Nick Holland said the total cost of buying out South Deep's shareholders was R18bn, including $1,2bn in cash paid to Barrick Gold, $528m for the hedge book and the issue of about 60-million Gold Fields shares. This has increased Gold Fields' net debt to $1,9bn, which would fall to $700m after the capital-raising.
Gold Fields shares fell as much as 4,6% to R120,20 yesterday before closing 0,21% higher at R126,26, while the rand gold price gained 2,7% to R151025/kg.
Trinity Asset Management CEO Quinton George said Gold Fields' move to cancel the hedge book was one of the smartest things it could have done. The capital-raising was a conservative move that would give Gold Fields some “fire power” for other opportunities.
Old Mutual Asset Managers analyst Mandla Mapondera said it was a good move as management was aware of the expectation in the market that it would raise capital, and had dealt with it.
Cockerill said Gold Fields could produce about 1-million ounces of gold a year in the long term from exploiting the single ore body that would result from the merger of its Kloof mine with the South Deep mine.