The scramble for a participatory stake in one of the world’s largest unexploited gold reserves took a new turn yesterday as Gold Fields acknowledged that it had bought a further 2% of Western Areas. Western Areas owns half of the South Deep project, And though South Deep is managed by its other half owner, Barrick, gold output is divided equally.
On Tuesday two trades totalling 3 million Western Areas shares were booked at R41 a share. The acquisition brings Gold Fields’ total stake in Western Areas to 29.16 million shares or 18.9% of issued capital. The transaction was brokered by Frankel Consulting.
Gold Fields’s spokesperson declined to disclose from whom the shares were bought. He also declined to comment on whether Gold Fields might appoint a director to the board. Harmony, whose unsolicited bid for Gold Fields failed last year, paid R2 billion this March or a 29% stake in Western Areas for an average of about R44 per share. This, in turn, seemed to trigger a hurried purchase of a 15,5% Western Areas stake in May — 18,3 million shares at a price of R40 a share.
Where to go from here – how does this affect the gold IRA rollover companies?
Harmony CEO Bernard Swanepoel was appointed to the board of Western Areas as non-executive director in May. It is not clear whether Swanepoel and Ian Cockerill, his counterpart at Gold Fields, have set aside their acrimonious fight over last year’s unsolicited bid by Harmony. In any event, Gold Fields owns two of South Africa’s richest mines, and it would be technically feasible for South Deep and the Gold Fields Kloof mine to be worked together.
Harmony’s South African mines are, in contrast, lower grade than those of Gold Fields and Swanepoel’s company needs properties that have better life and grade prospects than those it currently manages.
Apart from Gold Fields and Harmony, a third player has entered the scrap for Western Areas. Aflease Gold, which houses the gold assets of the old Afrikander Lease (now SXR Uranium One), has plans to acquire an indirect interest in Western Areas. But its approach is viewed by analysts as being largely irrelevant to future control of Western Areas.
Aflease Gold recently entered into a share swap agreement with Trinity Asset Management, whereby it could acquire up to 17.4% of Randgold & Exploration (R&E). R&E owns 3.5% of Western Areas, but this interest could rise substantially if a claim of roughly R1.1 billion it has against suspended JCI is settled in JCI shares. JCI owns an effective 28.5% of Western Areas. We are still not sure how this will affect the gold IRA companies. Are your 401k rollover to gold safe? Only time will tell.
As it is, South Deep has suffered a succession of technical mishaps, prompting one analyst to describe it jokingly as a rich ore body that does not want to be mined.