Daily Newsletter

22 December 2023

Daily Newsletter

22 December 2023

Galiano Gold to acquire Ghanian gold mine stake for $170m

Through the acquisition, Galiano Gold will double gold production at the Asanko mine.

Surya Akella December 22 2023

Galiano Gold has reached an agreement to acquire its joint venture (JV) partner Gold Fields’ 45% stake in the Asanko gold mine in Ghana for $170m (C$225.69m).

Presently, Galiano Gold and Gold Fields each own a 45% stake in the Asanko gold mine through their respective subsidiaries. The remaining 10% stake is held by the Government of Ghana.

As per the terms of the latest agreement, Galiano will issue shares worth $20m to Gold Fields. This will result in Gold Fields owning up to 19.9% of Galiano.

A future cash payment of up to $85m will also be made, with $25m payable on or before 31 December 2025.

This will be followed by $30m to be paid on or before 31 December 2026 and $30m to be paid after production of 100,000oz of gold from the mine’s Nkran deposit.

Gold Fields will also receive a capped 1% net smelter return (NSR) royalty for 447,000oz of gold produced from the Nkran deposit. After the transaction is closed, the company will also receive $65m in cash.

The transaction is slated for completion in the first quarter of next year.

Once completed, Galiano will own and operate one of the largest gold mines in West Africa, with annual gold production of around 240,000oz between 2024 and 2030.

By acquiring Gold Fields’ stake, it can immediately double gold production at Asanko, as well as cash flow, and mineral reserves and resources.

The bulk of the upfront consideration will be secured through cash from the existing JV operations. More than 50% of the total consideration is deferred, to be paid after an expected period of elevated cash flows.

Galiano Gold president and CEO Matt Badylak said: “This transaction marks a significant value-adding event for the shareholders of Galiano, transforming the company into a relevant, emerging mid-tier gold producer by consolidating one of the largest gold-producing mines in West Africa.

“Upon closing of the Acquisition, Galiano immediately doubles attributable gold production and will further increase this to an expected average of 240,000oz per year over the life of mine.

“The transaction structure results in a strongly accretive acquisition and galvanizes a significant rerate opportunity for our shareholders. This includes Gold Fields, who continue to be a supportive shareholder through an increased share ownership In Galiano.”

In April 2018, Gold Fields agreed to form a 50:50 JV with Asanko Gold (present name Galiano Gold).

As part of the agreement, a Gold Fields unit acquired a 45% stake in the Asanko gold mine, and related properties and exploration rights, for $185m.

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