In an about-face South African gold miner, and target of a hostile takeover bid, Gold Fields (GFI-N) has concluded preliminary talks with predator Harmony Gold (HMY-N).
The weekend meetings in Moscow, which also included Harmony backer Norilsk Nickel were designed to “explore alternative transactions, which could be mutually acceptable and beneficial to all parties relating to the current offer by Harmony for Gold Fields.”
Gold Fields says that any such deal would still be subject to Norilsk’s agreement to irrevocably vote its Gold Fields shares with Harmony. Norilsk is Gold Fields’ biggest shareholder with a 20% stake; the Russian recently helped Harmony quash Gold Fields’ plan to merger its international assets with those of Iamgold (IMG-T).
In other news, Harmony has reported mineral reserves amounting to 395.5 million tonnes averaging 0.17 oz. per ton, for 66.8 million contained ounces. Excluding 1.7 million depleted ounces and 5.95 million inferred ounces the total falls to 59.1 million ounces. That’s down from the 62.1 million ounces reported in the company’s annual report released in June, but ahead of an audited total of 39 million ounces reported in March.
Of the total reserves, some 12.5 million ounces are situated “below infrastructure,” and would require further development to access. Excluding those ounces, the reserves come to 46.6 million ounces.
In its early November response document, Gold Fields cited its concerns with the differences between the reserves reported in Harmony’s 2004 Annual Report and the 41 million oz. included in the takeover document.
Gold Fields subsequently included the discrepancy in its barrage of legal challenges to Harmony’s bid; the United States District Court for the Southern District of New York ruled in Harmony’s favour, noting that Gold Fields’ own expert witness agreed that Harmony’s gold reserve estimate was justified.
Harmony recently acquired 11.8% of Gold Fields’ shares under the early-settlement portion of its takeover bid. The follow-on offer for the balance of Gold Fields’ share is slated to close in February; Norilsk has committed its shares to the offer. The deal still requires the approval of South Africa’s Competition Commission.
Harmony’s offer remains at 1.275 of its own shares for each Gold Field share.