JOHANNESBURG (miningweekly.com) – South African gold-miner Gold Fields’ decision to sell its 19,9% stake in China-focused Sino Gold would not change the company’s aspiration to grow its international production, says CEO Nick Holland.

The JSE-listed Gold Fields announced on Wednesday that it had sold its stake in Sino Gold to TSX-listed Eldorado Gold for $282-million.

“We have definitely not changed course and our aspiration to grow production in each of our three international regions, West Africa, South America and Australasia, to at least one-million ounces a year, within a three-to five-year time horizon, remains intact,” Holland said in a statement.

He said that Gold Fields had received “several” expressions of interest for its stake in Sino Gold, and that it believed that the transaction with Eldorado was the most value-creating for shareholders.

“It has enabled us to crystallise the value of our investment while retaining exposure to China as a potential area for the future.”

Gold Fields said that it had agreed on a share exchange ratio of 48 Eldorado shares for every 100 Sino Gold shares, which would result in the South African-miner holding about 27,8-million Eldorado shares or about 7% of the outstanding shares of Eldorado on a fully diluted basis.

Furthermore, Gold Fields would hold a top-up right for a period of 18 months, which would apply should Eldorado purchase an additional 5% or more of the outstanding shares of Sino Gold and the sellers in that transaction realise a consideration ratio in excess of the share exchange ratio of 0,48 Eldorado shares for each Sino Gold share received by Gold Fields.

The transaction with Eldorado was subject to regulatory approvals, including South African Reserve Bank approval, and was expected to close at the end of August.

"Eldorado and Sino Gold both have a history of success in China and have become the two largest foreign gold producers in China. We view this stake in Sino Gold as an excellent opportunity to enhance our investment in China," said Vancouver-based Eldorado's CEO, Paul Wright.

He added that Eldorado, which is active in China, Brazil, Greece and Turkey, would continue to grow in a disciplined and focused manner, and that the group was pleased to have Gold Fields back as a shareholder.

INDEPENDENT GROWTH

Meanwhile, Holland said that Gold Fields would retain some exploration joint-ventures with Sino over the Jinshu project and other nominated properties in China.

It would also strengthen its own team in China, to allow for independent growth in that country.

China is the world’s largest gold-producing country, followed by the US and then South Africa, which held the number-one position for over 100 years.

Sino Gold’s flagship operation is the Jinfeng mine, which produces about 180 000 oz/y of gold, making it China’s second-largest gold mine. It also owns the White Mountain mine, where gold production will be ramped up to 65 000 oz/y in 2009, and is developing its third mine, the Eastern Dragon.

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