Gold Fields Limited
(Incorporated in the Republic of South Africa)
Registration number:1968/004880/06
ISIN: ZAE000018123
JSE Code: GFI
("Gold Fields")
TERMS OF THE COMBINATION OF GOLD FIELDS' INTERNATIONAL ASSETS WITH IAMGOLD
CORPORATION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 11 August 2004, shareholders are
advised that Gold Fields and IAMGOLD Corporation ("IAMGOLD") have now signed a
definitive agreement pursuant to which IAMGOLD will, subject to, inter alia,
the conditions precedent set out in paragraph 4 below, acquire all of Gold
Fields' mining, development and exploration assets located outside the Southern
African Development Community ("SADC"). IAMGOLD will, subject to adjustment,
issue to Gold Fields 351,690,218 fully paid and non-assessable common shares of
IAMGOLD (the "Consideration Shares") in consideration for such assets, which
will result in Gold Fields owning approximately 70 percent of the fully diluted
equity of the enlarged company. In addition, immediately before completion,
which is expected to take place on or about 31 December 2004, IAMGOLD
shareholders, registered as such on a record date which will be a date shortly
before completion, will receive a special cash dividend of C$0.50 per IAMGOLD
share (collectively "the Transaction").
2. Rationale
Gold Fields has established a significant portfolio of non-SADC assets which
produced approximately 1.4 million gold equivalent ounces on an attributable
basis for the financial year ended 30 June 2004. As at 30 June 2004, the
attributable proven and probable reserves for these assets totalled
approximately 14.7 million ounces of gold and the attributable mineral
resources represented approximately 25.8 million ounces of gold. Gold Fields
believes that the Transaction presents an opportunity to add further high
quality production of approximately 0.4 million ounces per annum through the
consolidation of IAMGOLD's and Gold Fields' holdings in the Tarkwa and Damang
mines in Ghana and through the addition of IAMGOLD's holdings in the Sadiola
and Yatela mines in Mali.
Furthermore, the Transaction creates an entity that is better equipped to
compete with international gold companies through more direct access to the
international capital and debt markets, thus providing the flexibility to react
more swiftly to acquisition and project development opportunities as they
arise.
The injection of Gold Fields' non-SADC assets into a separately listed,
freestanding, financially independent company should present an opportunity of
further value creation for Gold Fields shareholders as the market is expected
to benchmark the se assets against those of its international peer group -
which currently trade at a premium to the shares of Gold Fields.
3. The Transaction
3.1 The assets being acquired by IAMGOLD
The agreement provides for the transfer by Gold Fields or its subsidiaries to
IAMGOLD or its subsidiaries of:
* Gold Fields' 100 percent ownership interest in the St. Ives and Agnew gold
mines in Australia;
* Gold Fields' 71.1 percent ownership interest in the Tarkwa and Damang gold
mines in Ghana;
* the Arctic Platinum Project ("APP"), an advanced development project in
Finland in which Gold Fields has a 100 percent interest;
* Gold Fields' indirect 80 percent economic interest and 92 percent voting
interest in the Cerro Corona development project in Peru, the acquisition
of which is subject to completion; and
* a portfolio of other exploration properties, cash and investments,
(collectively, the "Acquired Interests").
3.2 The consideration
The consideration for the Acquired Interests will consist of 351,690,218 fully
paid and non-assessable common shares of IAMGOLD ranking pari passu with the
existing common shares in issue. Based on IAMGOLD's volume weighted average
trading share price over the 20 trading days prior to the 11 August 2004
announcement, these common shares had a market value of approximately US$2.1
billion. The number of common shares to be issued will be subject to adjustment
based on the total net cash contributed by Gold Fields to the ongoing
expenditure programmes of the Acquired Interests from 24 June 2004 through to
completion of the Transaction. This adjustment will be made based on the 20-day
volume weighted average trading price of the IAMGOLD shares prior to closing
and is capped at US$ 50 million. Following completion of the Transaction,
IAMGOLD will be constituted a listed subsidiary of Gold Fields.
3.3 The IAMGOLD special dividend
Shortly before completion, IAMGOLD shareholders who are registered as such on a
record date which will also be a date shortly before completion will receive a
special cash dividend of C$0.50 per IAMGOLD share.
3.4 Change of name
Upon completion of the Transaction, IAMGOLD will be renamed "GOLD FIELDS
INTERNATIONAL LIMITED" ("GOLD FIELDS INTERNATIONAL") and will become the
international growth vehicle (outside of the SADC region) for Gold Fields.
3.5 Stock exchange listings
Gold Fields will retain its existing primary listing in South Africa on the JSE
Securities Exchange South Africa ("the JSE") and listings abroad on the New
York Stock Exchange ("NYSE") and certain other international exchanges.
3.6 Termination and break fee arrangements
The Transaction provides for a US$20 million (approximately ZAR 129 million at
the ZAR/US$ exchange rate prevailing on 29 September 2004) break fee payable
under certain conditions by the party causing the definitive agreement to be
terminated.
3.7 Effective date
The closing and effective date of the Transaction is expected to be on or about
31 December 2004 .
3.8 Retention of shares in GOLD FIELDS INTERNATIONAL
GOLD FIELDS INTERNATIONAL will be constituted a subsidiary of Gold Fields and
Gold Fields is required to retain a controlling interest in GOLD FIELDS
INTERNATIONAL going forward. In this regard, Gold Fields has undertaken that ,
for so long as required by any South African regulatory authority, it will
retain a minimum shareholding of 50.1 percent in GOLD FIELDS INTERNATIONAL.
Upon closing of the Transaction, Gold Fields will be contractually precluded
from selling , subject to South African regulatory requirements, part of its
shareholding in GOLD FIELDS INTERNATIONAL unless it sells its entire
shareholding.
3.9 Anti-dilution rights
In order to satisfy certain conditions of the South African Reserve Bank -
Exchange Control Division ("SARB ") to granting its approval of the Transaction
(further described in paragraph 9 below), IAMGOLD has agreed to provide Gold
Fields with Anti-Dilution Rights. These rights include pre-emptive rights that
enable Gold Fields and its affiliates to purchase as many shares of GOLD FIELDS
INTERNATIONAL as is necessary to maintain beneficial ownership of not less than
50.1 percent (or such lesser percentage as may be required or permitted from
time to time by the SARB) of the outstanding common shares of GOLD FIELDS
INTERNATIONAL on a fully diluted basis from time to time. The Anti-Dilution
Rights entitle Gold Fields to maintain its ownership interest from time to time
by participating in any issuance of GOLD FIELDS INTERNATIONAL equity securities
for cash at the same price as other purchasers. In the case of a non-cash
issuance, Gold Fields is entitled to participate to the extent necessary to
enable it to maintain its interest at 50.1 percent (or such lesser percentage
as may be permitted by the SARB) at a cash price equal to the prevailing market
price or fair value of the securities being offered. The Anti-Dilution Rights
also restrict GOLD FIELDS INTERNATIONAL's ability to issue shares in
circumstances where shareholder approval is required, and has not been
obtained, prior to the exercise of Gold Fields pre-emptive rights.
4. Conditions Precedent
The Transaction is subject to, inter alia, the following principal conditions
precedent:
* the approval, to the extent necessary, of any regulatory authorities having
jurisdiction over the Transaction, including the JSE and Canadian
securities regulators;
* the approval by a majority of shareholders of Gold Fields (voting in person
or by proxy) at the general meeting to be held to approve the Transaction;
* the approval by a majority of shareholders of IAMGOLD (voting in person or
by proxy) at the special meeting of shareholders to be held to approve the
Transaction ;
* the listing of the Consideration Shares of IAMGOLD on the TSX and the NYSE
(or, failing the NYSE, the AMEX) and confirmation from the TSX and NYSE/
AMEX that the Consideration Shares will not be subject to escrow
arrangements;
* obtaining third party consents and releases from certain guarantees and
obligations of Gold Fields and its subsidiaries (other than the Acquired
Interests) in respect of the Acquired Interests, releases from certain
cross-guarantees and obligations flowing from the Acquired Interests in
favour of Gold Fields or its subsidiaries other than the Acquired Interests
and the consent of Mvelaphanda Resources Limited to the assignment of Gold
Fields' exploration rights outside of SADC;
* no person having acquired beneficial ownership of 20% or more of IAMGOLD's
outstanding common shares prior to completion of the Transaction;
* IAMGOLD entering into an agreement granting to Gold Fields the
Anti-Dilution Rights described above in paragraph 3.9;
* the absence of any changes, effects, occurrences or states of facts, other
than those affecting the economy and markets generally (including changes
to the gold price and currency exchange rates), that, either individually
or in the aggregate, have or would reasonably be expected to have a
material adverse effect on the Acquired Interests or IAMGold; and
* obtaining all necessary governmental consents for the Transaction.
5. Group Structure Post Transaction
Upon completion of the Transaction, Gold Fields will own:
* a 100 percent shareholding in the unlisted GFI Mining South Africa
(Proprietary) Limited ("GFIMSA"). This shareholding is subject to rights
held by a wholly owned subsidiary of Mvelaphanda Resources Limited
("Mvelaphanda") to acquire 15 percent of GFIMSA in terms of the
arrangements between Gold Fields and Mvelaphanda. GFIMSA currently owns and
operates the Kloof, Beatrix and Driefontein gold mines; and
* a controlling shareholding of approximately 70 percent in GOLD FIELDS
INTERNATIONAL . This vehicle will be the exclusive vehicle through which
Gold Fields intends to pursue non-SADC growth opportunities for so long as
it is a subsidiary of Gold Fields.
GOLD FIELDS INTERNATIONAL is expected to produce approximately 2 million ounces
of gold during 2005 at an average cash cost of approximately US$ 250 per ounce.
The company will have attributable unhedged proven and probable mineral
reserves of approximately 19.3 million ounces of gold and attributable measured
and indicated mineral resources of 26.0 million ounces with an additional 9.1
million ounces of inferred mineral resource.
Following completion of the Transaction, the Gold Fields simplified group
structure would be as follows:
6. Summary information on IAMGOLD
IAMGOLD is a leading gold mining exploration and development company
headquartered in Toronto, Canada. Its principal assets, located in West Africa,
include a 38 percent stake in the Sadiola Gold Mine and a 40 percent stake in
the Yatela Gold Mine, both located in Mali, and an 18.9 percent stake in the
Tarkwa/Damang complex in Ghana (which is controlled and operated by Gold
Fields). IAMGOLD 's share of the combined annual gold production from these
properties for the financial year ending 31 December 2004 is expected to be
approximately 420,000 ounces. IAMGOLD also has a diverse royalty portfolio,
which includes a 1 percent royalty interest in the Diavik Diamond Project in
Canada and a 0.72 percent royalty interest in the Williams gold mine in Canada.
IAMGOLD is currently listed on both the TSX and the AMEX.
IAMGOLD asset summary
2-P Reserves+ Production
Iamgold Reserves Resources 2003cash (000's oz)
cost
Asset Location Interest (000's oz) (000's oz) (US$/oz) 2003A
(%)
Sadiola Mali 38%(1) 1,025 4,295 213 172
Yatela Mali 40%(2) 385 625 244 87
Tarkwa Ghana 18.9%(3) 1,860 4,220 224 105
Damang Ghana 18.9%(3) 175 285 230 57
3,445 9,425 421
Source: IAMGold shareholder circular, dated April 30, 2004
(1) The remaining owners are AngloGold (38%), the Government of Mali (18%) and
IFC (6%)
(2) The remaining owners are Anglogold (40%) and the Government of Mali (20%)
(3) Gold Fields owns 71.1% stake in this mine, and the Government of Ghana owns
10%
7. Pro-forma financial effects of the Transaction on Gold Fields
The pro forma financial effects of the Transaction on Gold Fields set out below
are based on Gold Fields' audited results for the year ended 30 June 2004.
The pro forma financial effects have been prepared for illustrative purposes
only to provide information on how the Transaction might have impacted on the
results and financial position of Gold Fields had the Transaction occurred
during the year ended 30 June 2004. Because of their nature, the pro forma
financial effects may not give a fair reflection of Gold Fields' financial
position at 30 June 2004, after the Transaction, or the effect on future
earnings.
Before1 After2 Percentage
SA cents SA cents change
Headline earnings per share3 157 141 (10.2%)
Earnings per share3&4 158 141 (10.8%)
Net asset value per share5 3 042 3 442 13.1%
Tangible net asset value per 3 042 2 972 (2.3%)
share5
Notes:
1. Based on the audited consolidated financial statements of Gold Fields for
the year ended 30 June 2004
2. Represents pro forma financial effects after the Transaction
3. In relation to the pro forma earnings and headline earnings it is assumed
that:
(a) The Transaction was effective on 1 July 2003.
(b) IAMGOLD's results were included for the 12 months ended 30 June 2004.
(c) The consideration for the Transaction was based on the market value of
IAMGOLD at a share price of C$7.86.
(d)Fair value adjustments to IAMGOLD's assets are amortised over the relevant
operation's economic life. (As a consequence of the transaction effectively
resulting in the reverse acquisition of IAMGOLD by Gold Fields, the IAMGOLD
assets are required to be fair valued.)
4. Effective July 1, 2004, Gold Fields adopted IFRS 3, which requires that
goodwill should not be amortised but tested for impairment. Earnings per share
are, therefore, shown on this basis. Under Gold Fields' previous policies (i.e.
before adoption of IFRS 3), pro forma earnings per share would have be en 106
SA cents.
5. In relation to pro forma net asset value and tangible net asset value it is
assumed that:
(a) The Transaction was effective on 30 June 2004.
(b) Gold Fields is the acquirer through a reverse acquisition, resulting in
IAMGOLD's assets being restated to fair value.
(c) IAMGOLD's financial position was included as at 30 June 2004.
(d) The consideration for the Transaction was based on the market value of
IAMGOLD at a share price of C$7.86.
(e) Transaction costs estimated at R110m are included in the purchase
consideration.
(f) Fair value adjustments to IAMGOLD's listed investments and of gold bullion
inventory are reflected in market prices as at 31 August 2004.
8. Changes to the boards of directors and management of Gold Fields and Gold
Fields International
In connection with the completion of the Transaction, the number of directors
of IAMGOLD will be increased to ten, with three of the current directors of
IAMGOLD remaining as directors and seven new individuals nominated by Gold
Fields being elected or appointed as directors (subject to approval by IAMGOLD
shareholders). Subject to formal process, it is anticipated that Gordon R.
Parker will become Chairman of GOLD FIELDS INTERNATIONAL and resign from the
current Gold Fields board. Mr. Parker is the former Chairman and CEO of Newmont
Mining. Similarly Chris Thompson will resign from his post as Chairman of Gold
Fields to become President and CEO of the new company. William Pugliese,
current ly Chairman of IAMGOLD, will become deputy Chairman. Other key
appointments to the management of GOLD FIELDS INTERNATIONAL will include John
Munro as Chief Operating Officer, Craig Nelsen as head of Exploration and
Corporate Development, and Grant Edey as Senior Vice President Finance. Messrs
Munro and Nelsen will resign from their current positions with Gold Fields at
completion. The Gold Fields' nominees to the board of GOLD FIELDS INTERNATIONAL
will include Ian Cockerill and Nick Holland, currently CEO and CFO,
respectively, of Gold Fields.
Alan Wright, currently Deputy Chairman of Gold Fields, is anticipated to
succeed Mr. Thompson as Chairman of Gold Fields.
Upon completion of the Transaction, Gold Fields and Gold Fields International
will enter into a relationship agreement to govern their ongoing relationship,
including the treatment of potential corporate opportunities and conflicts of
interest, and to provide for independent committees to oversee the agreement.
9. SARB Approval
Gold Fields has received approval for the Transaction from the SARB on the
basis that:
9.1 At all times Gold Fields maintains a shareholding of at least 50.1 percent
in GOLD FIELDS INTERNATIONAL;
9.2 Gold Fields, in order to maintain a shareholding of at least 50.1 percent
in GOLD FIELDS INTERNATIONAL, will be permitted, subject to the approval of the
SARB on a case-by-case basis, to follow its rights in any equity capital market
fund raising by GOLD FIELDS INTERNATIONAL by using funds sourced from within
South Africa, provided that:
(i) funds sourced from within South Africa are to be applied towards capital
expenditure on a specific project or towards the funding of any corporate
acquisition of GOLD FIELDS INTERNATIONAL;
(ii) the requirements as set out in 9.3 below are complied with; and
(iii) the financing of the following of such rights must be completed within
the foreign direct investment limits or other exchange control policy
parameters prevailing at such time;
9.3 GOLD FIELDS INTERNATIONAL will be permitted to pursue subsequent corporate
acquisitions or projects without seeking prior approval from the SARB on the
following terms:
(i) the acquisition or project should be in the same line of business that it
is currently pursuing - i.e. the mining of gold as well as platinum group
metals. However, in some cases copper and other base metals could be by-product
revenue to the main process of mining for gold and platinum group metals;
(ii) any acquisition or project that is pursued would also be subject to GOLD
FIELDS INTERNATIONAL maintaining an ownership interest of at least 50.1 percent
therein;
(iii) any financing arrangements relating to such acquisitions must be without
recourse to South Africa;
(iv) any acquisition or project pursued by GOLD FIELDS INTERNATIONAL should
result in a benefit to South Africa over the longer term. Over and above the
normal benefits in terms of added value through such acquisitions or projects,
Gold Fields has agreed to use its reasonable commercial endeavours to source
technical skills from South Africa in developing any acquisitions, consider
procurement opportunities from South Africa and investigate the possibility of
providing employment opportunities in areas where specific expertise is
required and is available; and
(v) Gold Fields is required to report back to the SARB after any acquisition,
giving full details of the acquisition and the financing mechanisms and details
of the specific benefits accruing to South Africa.
The SARB has agreed to allow the annual earnings of GOLD FIELDS INTERNATIONAL
to be retained offshore to the extent required for working capital, funds for
expansion programmes and projects, corporate acquisitions and debt servicing.
In this regard Gold Fields is required to report annually to SARB on GOLD
FIELDS INTERNATIONAL's requirements.
10. Undertakings, recommendation and opinions
IAMGOLD has appointed RBC Capital Markets ("RBC") as independent financial
adviser to advise the Special Committee of IAMGOLD on the terms of the
Transaction. The Special Committee and directors of IAMGOLD have received an
opinion from RBC in a form and substance satisfactory to the Special Committee
and the directors of IAMGOLD that, as of the date hereof, the consideration
under the Transaction is fair, from a financial point of view, to IAMGOLD. All
the directors of IAMGOLD who are shareholders of IAMGOLD have undertaken to
vote in favour of the resolutions required to implement the Transaction.
The directors of Gold Fields believe that the Transaction will be beneficial to
Gold Fields shareholders and have voted unanimously in favour of the
Transaction at a board meeting held to consider and approve the Transaction.
Accordingly, all the directors of Gold Fields who currently hold shares in Gold
Fields have undertaken to vote in favour of the resolutions required to
implement the transaction.
11. Documentation and announcements
Subject to the approvals of the JSE and Canadian regulatory authorities,
documentation setting out full details of the Transaction, will be mailed to
the shareholders of Gold Fields and IAMGOLD on or about 10 November 2004 . A
further announcement on the salient dates, including the dates of the meetings
for Gold Fields and IAMGOLD shareholders to approve the Transaction, will be
published in due course.
SRK Consulting has been appointed independent technical adviser in regard to
the Transaction and is compiling technical reports for Gold Fields and IAMGOLD
consistent with Canadian securities regulations, which are acceptable to the
JSE. These reports will be made available to Gold Fields shareholders.
An update on the Transaction will be provided at Gold Fields AGM on 16 November
2004.
12. withdrawal of cautionary announcement
Shareholders are advised that as the terms of the Transaction (including the
conditions precedent to which the Transaction is still subject) have been
announced, caution is no longer required to be exercised by shareholders when
dealing in their securities.
Johannesburg
30 September 2004
Lead financial adviser and transaction Rothschild
sponsor
Co- financial Advisers Goldman Sachs International, J P Morgan
Attorneys Edward Nathan & Friedland, McCarthy
Tetrault LLP
Sponsor J P Morgan
Reporting accountants PricewaterhouseCoopers
Cautionary Statements
Safe Harbor Statement under the United States Private Securities Litigation
Reform Act of 1995: Certain statements in this document constitute "forward
looking statements" within the meaning of Section 27A of the US Securities Act
of 1933 and Section 21E of the US Securities Exchange Act of 1934. Such
forward-looking statements, including but not limited to those with respect to
the price of gold, the timing and amount of estimated future production, costs
of production, estimated operating results, reserve determination and reserve
conversion rates, involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievement of
IAMGOLD or Gold Fields to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such risks, uncertainties and other factors include, among others,
risks related to the integration of acquisitions, increased production costs,
risks related to international operations, risks related to joint venture
operations, the actual results of current exploration activities, actual
results of current reclamation activities, conclusions of economic evaluations,
changes in project parameters as plans continue to be refined, future prices of
gold, currency devaluations, labour disruptions; changes in government
regulations, particularly environmental regulations, changes in exchange rates,
inflation and other macro-economic factors, as well as those factors discussed
in the section entitled "Risk Factors" in the Form 40-F for IAMGOLD and the
Form 20-F for Gold Fields as on file with the U.S. Securities and Exchange
Commission in Washington, D.C. Although IAMGOLD and Gold Fields have attempted
to identify important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate as actual results and future events could
differ materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking statements. These
forward-looking statements speak only as of the date of this document.
Investors are advised that National Policy 43-101 of the Canadian Securities
Administrators requires that each category of mineral reserves and mineral
resources be reported separately. Investors and securities holders should refer
to the annual information form of IAMGOLD for the year ended December 31, 2003,
and material change reports filed by IAMGOLD since January 1, 2003 available at
www.sedar.com, for this detailed information with respect to IAMGOLD, which is
subject to the qualifications and notes set forth therein. United States
investors are advised that while the terms "measured" and "indicated" resources
are recognized and required by Canadian regulations, the SEC does not recognize
them. Investors are cautioned not to assume that all or any part of mineral
deposits in these categories will ever be converted into reserves.
END
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