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Equity Accounted Investees
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Equity Accounted Investees
 
 
 
  
UNITED STATES DOLLAR
 
 
 
 
  
2019
 
 
2018
 
 
2017
 
16.1
 
EQUITY ACCOUNTED INVESTEES
  
   
 
   
 
   
 
 
Investment in joint ventures
  
 
172.0
 
 
 
177.5
 
 
   
(a)
 
Far Southeast Gold Resources Incorporated (“FSE”)
  
 
82.1
 
 
 
91.7
 
 
   
(b)
 
Asanko Gold
  
 
89.9
 
 
 
85.8
 
 
   
 
 
Investment in associates
  
 
—  
 
 
 
47.6
 
 
   
(c)
 
Maverix Metals Incorporated (“Maverix”)
  
 
—  
 
 
 
47.6
 
 
   
(d)
 
Other associates
  
 
—  
 
 
 
—  
 
 
   
 
 
 
  
 
 
 
 
 
 
 
 
   
 
 
Total equity accounted investees
  
 
172.0
 
 
 
225.1
 
 
   
 
 
 
  
 
 
 
 
 
 
 
 
   
 
 
Share of results of equity accounted investees, net of taxation recognised in the consolidated income statement are made up as follows:
  
   
 
   
 
   
(a)
 
Far Southeast Gold Resources Incorporated (“FSE”)
  
 
(1.4
) 
 
 
(12.9
) 
 
 
(1.6
) 
(b)
 
Asanko Gold
  
 
4.1
 
 
 
(1.1
) 
 
 
—  
 
(c)
 
Maverix Metals Incorporated (“Maverix”)
  
 
0.4
 
 
 
0.9
 
 
 
0.3
 
(d)
 
Other associates
  
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
Total share of results of equity investees net of tax
  
 
3.1
 
 
 
(13.1
) 
 
 
(1.3
) 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
(a)
 
Far Southeast Gold Resources Incorporated (“FSE”)
Gold Fields interest in FSE, an unlisted entity incorporated in the Philippines, was 40% (2018: 40% and 2017: 40%) at 31 December 2019.
Gold Fields paid US$10.0 million in option fees to Lepanto Consolidated Mining Company (“Lepanto”) during the six months ended 31 December 2010. In addition, Gold Fields paid
non-refundable
down payments of US$66.0 million during the year ended 31 December 2011 and US$44.0 million during the six months ended 31 December 2010 to Liberty Express Assets in accordance with the agreement concluded whereby the Group has the option to acquire 60% of FSE. On 31 March 2012, Gold Fields acquired 40% of the issued stated capital and voting rights of FSE by contributing an additional
non-refundable
down payment of US$110.0 million. Lepanto owns the remaining 60% shareholding in FSE.
The remaining 20% option is not currently exercisable until such time as FSE obtains a Foreign Technical Assistance Agreement (“FTAA”) which allows for direct majority foreign ownership and control.
FSE has a 31 December
year-end
and has been equity accounted since 1 April 2012. FSE’s equity accounting is based on results to 31 December 2019.
Investment in joint venture consists of:
 
 
  
2019
 
  
2018
 
Unlisted shares at cost
  
 
230.0
 
  
 
230.0
 
Equity contribution
  
 
93.6
 
  
 
92.2
 
Cumulative impairment
1
  
 
(147.9
) 
  
 
(138.3
) 
Share of accumulated losses brought forward
  
 
(92.2
) 
  
 
(79.3
) 
Share of loss after taxation
2
  
 
(1.4
) 
  
 
(12.9
) 
 
  
 
 
 
  
 
 
 
Total investment in joint venture
3
  
 
82.1
 
  
 
91.7
 
 
  
 
 
 
  
 
 
 
 
1
 
 
Refer note 6 for details of impairment.
2
 
 
Gold Fields share of loss after taxation represents exploration and other costs, including work completed on a scoping study, which is fully funded by Gold Fields as part of their equity contribution.
3
 
 
FSE is a company incorporated under the laws of the Philippines and owns the gold-copper Far Southeast exploration project (the “FSE project”). During the exploration phase of the FSE project and as long as the 20% option remains exercisable, the Group has joint control over the FSE project. The Group will only have the power to direct the activities of FSE once it exercises the option to acquire the additional 20% shareholding in FSE, which is only exercisable once a FTAA is obtained. FSE has no revenues or significant assets or liabilities. Assets included in FSE represent the rights to explore and eventually mine the FSE project.
(b)
 
Asanko Gold
The Asanko Gold joint venture entities comprise the following:
 
 
•
 
A 45% interest in Asanko Gold Ghana Limited (“AGGL”), incorporated in Ghana, which owns the Asanko Gold Mine. The Government of Ghana continues to retain a 10% free carried interest in AGGL;
 
 
•
 
A 50% interest in Adansi Gold Company Limited (“Adansi”), incorporated in Ghana; and
 
 
•
 
A 50% interest in Shika Group Finance Limited (“Shika”), incorporated in the Isle of Man.
Gold Fields and Asanko have joint control and the Asanko transaction is structured as a separate vehicle and the Group has a residual interest in the net assets of Asanko. Accordingly, the Group has classified its interest in Asanko as a joint venture.
Refer to note 15 for further information on the acquisition of this investment.
Asanko has a 31 December
year-end
and has been equity accounted since 31 July 2018. Asanko’s equity accounting is based on results to 31 December 2019.
The Asanko joint venture is structured through a number of separate vehicles and the Group has a residual interest in the net assets of Asanko. Accordingly, the Group has classified its interest in Asanko as a joint venture.
The following table summarises the financial information and the carrying amount of the Group’s interest in Asanko:
Investment in joint venture at cost conists of:
 
 
  
2019
 
  
2018
 
Initial investment at cost
  
 
86.9
 
  
 
86.9
 
Share of accumulated losses brought forward
  
 
(1.1
) 
  
 
—  
 
Share of profit/(loss) after taxation
  
 
4.1
 
  
 
(1.1
) 
 
  
 
 
 
  
 
 
 
Carrying value at 31 December 2018
  
 
89.9
 
  
 
85.8
 
 
  
 
 
 
  
 
 
 
The carrying value of the investment comprises the following:
  
   
  
   
AGGL
  
 
9.5
 
  
 
5.4
 
Shika
  
 
80.4
 
  
 
80.4
 
Adansi
1
  
 
—  
 
  
 
—  
 
 
  
 
 
 
  
 
 
 
Total
  
 
89.9
 
  
 
85.8
 
 
  
 
 
 
  
 
 
 
  
The Group’s interest in the summarised financial statements of Asanko on a combined basis after fair value adjustments as determined at acquisition, is as follows:
 
 
  
   
 
  
2019
 
  
2018
 
Statement of financial position - Asanko
  
   
  
   
Non-current
assets
3
  
 
474.6
 
  
 
441.6
 
Current assets
2
  
 
120.0
 
  
 
109.3
 
Non-current
liabilities
  
 
(79.4
) 
  
 
(34.2
) 
Current liabilities
  
 
(62.2
) 
  
 
(52.7
) 
 
  
 
 
 
  
 
 
 
Net assets
  
 
453.0
 
  
 
464.0
 
Less: Shika redeemable preference shares at acquisition
  
 
(271.4
) 
  
 
(291.4
) 
 
  
 
 
 
  
 
 
 
Net assets attributable to ordinary share holders
  
 
181.6
 
  
 
172.6
 
 
  
 
 
 
  
 
 
 
Group’s share of net assets
  
 
89.9
 
  
 
85.8
 
 
  
 
 
 
  
 
 
 
Reconciled as follows:
  
   
  
   
Cash consideration paid
  
 
165.0
 
  
 
165.0
 
Less: Consideration allocated to the redeemable preference shares (note 17)
  
 
(129.9
) 
  
 
(129.9
) 
 
  
 
 
 
  
 
 
 
Consideration paid for equity portion
  
 
35.1
 
  
 
35.1
 
Gain on acquisition
  
 
51.8
 
  
 
51.8
 
Share of accumulated losses brought forward
  
 
(1.1
) 
  
 
—  
 
Share of profit/(loss) after taxation
  
 
4.1
 
  
 
(1.1
) 
 
  
 
 
 
  
 
 
 
Carrying amount of interest in joint venture
  
 
89.9
 
  
 
85.8
 
 
  
 
 
 
  
 
 
 
Income statement - Asanko
  
   
  
   
Revenue
  
 
341.0
 
  
 
122.0
 
Production costs
  
 
(199.2
) 
  
 
(79.0
) 
Depreciation and amortisation
  
 
(95.4
) 
  
 
(34.3
) 
Other expenses
  
 
(20.1
) 
  
 
(4.9
) 
Royalties
  
 
(17.2
) 
  
 
(6.2
) 
Income tax expense
  
 
—  
 
  
 
—  
 
 
  
 
 
 
  
 
 
 
Profit/(loss) for the year (2018: five month period)
  
 
9.1
 
  
 
(2.4
) 
Other comprehensive income
  
 
—  
 
  
 
—  
 
 
  
 
 
 
  
 
 
 
Total comprehensive income
  
 
9.1
 
  
 
(2.4
) 
 
  
 
 
 
  
 
 
 
Group’s share of total comprehensive income
  
 
4.1
 
  
 
(1.1
) 
 
  
 
 
 
  
 
 
 
 
1
 
Nominal value at 31 December 2019 and 2018 is less than US$0.1 million.
2
 
 
Current assets includes cash and cash equivalents amounting of US$43.7 million (2018: US$21.6 million).
3
 
Includes impact of fair value adjustment, amounting to US$39.6 million, to property, plant and equipment of the Asanko Gold mine as determined at acquisition.
(c)
 
Maverix Metals Incorporated (“Maverix”)
Gold Fields’ interest in Maverix, listed on the Toronto Stock Exchange, was nil% (2018: 19.9%) at 31 December 2019.
On 23 December 2016, Gold Fields sold a portfolio of eleven producing and
non-producing
royalties to Maverix in exchange for 42.85 million common shares and 10.0 million common share purchase warrants of Maverix, realising a profit on disposal of US$48.0 million.
In 2018, Maverix purchased a portfolio of royalties from Newmont (the “Transaction”). As part of the consideration for the Transaction, Maverix issued Newmont 60,000,000 common shares and 10,000,000 common share purchase warrants. The Transaction resulted in the dilution of Gold Fields’ interest in Maverix from 28% to 20% at 31 December 2018. The Transaction resulted in Gold Fields recognising a profit on the deemed disposal of its interest in Maverix of US$4.0 million.
In line with its key strategic objective of paying down its debt, Gold Fields Limited sold its shareholding in Maverix during the year ended 31 December 2019. The sale of the shares, processed through a series of private market transactions, raised US$66.8 million in cash. After the first transaction, Maverix no longer met the definition of an associate and it was reclassified as a listed investment and a profit on disposal of US$14.6 million was recognised comprising a profit on disposal of associate of US$33.8 million, partially offset by a loss on derecognition of the investment in Maverix designated at fair value through profit or loss of US$19.2 million.
Gold Fields retained 4,125,000 Maverix warrants, equivalent to a 3.68% interest in the company on a partially-diluted basis. The warrants are classified as derivative instruments and are included in investments (refer note 17).
Maverix has a 31 December
year-end
and has been equity-accounted since 23 December 2016. Equity accounting for Maverix was based on the published results to 9 May 2019, being the date on which Maverix was derecognised as an associate.
Investment in associate consists of:
 
 
  
Listed shares at cost
  
 
42.1
 
 
 
42.1
 
 
  
Profit on dilution of Gold Fields’ interest in Maverix
  
 
4.0
 
 
 
4.0
 
 
  
Transaction costs capitalised
  
 
0.3
 
 
 
0.3
 
 
  
Share of accumulated profits brought forward
  
 
1.2
 
 
 
0.3
 
 
  
Share of profit after taxation
  
 
0.4
 
 
 
0.9
 
 
  
Derecognition of associate
  
 
(48.0
) 
 
 
—  
 
 
  
 
  
 
 
 
 
 
 
 
 
  
Investment in associate - Maverix
1
  
 
—  
 
 
 
47.6
 
 
  
 
  
 
 
 
 
 
 
 
(d)   
  
Other
  
   
 
   
 
  
Investment in associate
  
 
—  
 
 
 
—  
 
 
  
Rusoro Mining Limited (“Rusoro”)
2
  
 
—  
 
 
 
—  
 
 
  
 
  
 
 
 
 
 
 
 
 
1
 
 
The fair value, based on the quoted market price of the investment, in Maverix at 31 December 2018 was US$74.7 million.
2
 
 
Represents a holding of 25.7% (2018: 25.7%) in Rusoro.
The carrying value of Rusoro, incorporated in Venezuela, was written down to US$nil at 31 December 2010 due to losses incurred by the entity. The fair value, based on the quoted market price of the investment, in Rusoro at 31 December 2019 is US$6.5 million (2018: US$13.4 million).The unrecognised share of loss of Rusoro for the year amounted to US$4.2 million (2018: unrecognised shares of loss of US$2.6 million). The cumulative unrecognised share of losses of Rusoro at 31 December 2019 amounted to US$202.8 million (2018: US$198.6 million).
On 22 August 2016, the Arbitration Tribunal, operating under the Additional Facility Rules of the World Bank’s International Centre for the Settlement of Investment Disputes, awarded Rusoro damages of US$967.8 million plus pre and post-award interest which currently equates to in excess of US$1.2 billion in the arbitration brought by Rusoro against the Bolivarian Republic of Venezuela (“Venezuela”).
Venezuela has not complied with the arbitration award terms, which were issued on 22 August 2016. On 6 December 2017, Rusoro obtained a judgement against Venezuela in the Superior Court of Justice in Ontario, Canada, in excess of US$1.3 billion. The judgement, which was issued on default as a result of Venezuela’s failure to appear before the Ontario court, arised out of Rusoro’s ongoing dispute with Venezuela over the South American nation’s seizure of its gold mining properties in the country. The Canadian judgement, which confirmed an arbitration award issued in Rusoro’s favour in the same amount, was issued on 25 April 2017. Venezuela did not appeal or seek to vacate the judgement, and its time to do so expired.
Rusoro further filed a suit in the Supreme Court of the State of New York, seeking recognition of the Canadian judgement. Rusoro brought the New York lawsuit in addition to an action it filed in the U.S. District Court for the District of Columbia, which seeks recognition of and the entry of judgement on the original arbitration award. A favourable ruling from either the New York or D.C. court will entitle Rusoro to use all legal procedures – including broad discovery from both Venezuela and third parties – that U.S. law provides judgement creditors. Any judgement issued in New York will also accrue interest at 9% per annum until the judgement is fully paid. On 19 October 2018, Rusoro announced that it had reached a settlement agreement with Venezuela by which the Venezuela government agreed to pay Rusoro US$1.28 billion to acquire the company’s mining data and full release of the judgement issued in favour of the company. In a decision dated 29 January 2019, the Paris Court of Appeals partially annulled the arbitral award issued in favour of the Company in August 2016. Rusoro continues to vigorously pursue all available remedies to reinstate such award.
Management have not recognised this amount due to the uncertainty over its recoverability.
16.2
 
INTEREST IN JOINT OPERATION
On 13 December 2016, Gold Fields purchased 50% of the Gruyere Gold Project and entered into a 50:50 unincorporated joint operation with Gold Road Resources Limited (“Gold Road”) for the development and operation of the Gruyere Gold Project in Western Australia, which comprises the Gruyere gold deposit as well as additional resources including Central Bore and Attila/Alaric.
Gold Fields acquired 50% interest in the Gruyere Gold Project for a total purchase consideration of A$350.0 million payable in cash and a 1.5% royalty on Gold Fields’ share of production after total mine production exceeds 2 million ounces. The cash consideration is split with A$250.0 million payable on the effective date and A$100.0 million payable according to an agreed construction cash call schedule. Transaction costs of A$18.5 million (US$13.3 million) were incurred. Of the A$100.0 million payable, A$7.0 million was paid in 2016, A$78.0 million in 2017 and A$15.0 million in 2018.
The Gruyere project was successfully completed during 2019, with first gold produced in June 2019. Commercial levels of production were achieved at the end of September 2019.
Below is a summary of Gold Fields’ share of the joint operation and includes inter-company transactions and balances:
 
 
  
2019
 
  
2018
 
Statement of financial position
  
US$
 
  
A$
 
  
US$
 
  
A$
 
Non current assets
  
   
  
   
  
   
  
   
Property, plant and equipment
  
 
623.0
 
  
 
887.6
 
  
 
554.6
 
  
 
788.6
 
Current assets
  
 
27.5
 
  
 
39.3
 
  
 
11.7
 
  
 
16.5
 
Cash and cash equivalents
  
 
6.5
 
  
 
9.3
 
  
 
2.1
 
  
 
3.0
 
Inventories
  
 
18.3
 
  
 
26.1
 
  
 
0.8
 
  
 
1.1
 
Prepayments
  
 
—  
 
  
 
—  
 
  
 
6.4
 
  
 
9.1
 
Other receivables
  
 
2.7
 
  
 
3.9
 
  
 
2.4
 
  
 
3.3
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total assets
  
 
650.5
 
  
 
926.9
 
  
 
566.3
 
  
 
805.1
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total equity
  
   
  
   
  
   
  
   
Retained earnings
  
 
(0.6
) 
  
 
(0.8
) 
  
 
(4.7
) 
  
 
(6.7
) 
Non current liabilities
  
 
147.3
 
  
 
209.9
 
  
 
119.7
 
  
 
170.3
 
Deferred taxation
  
 
50.2
 
  
 
71.6
 
  
 
30.5
 
  
 
43.3
 
Lease liabilities
  
 
79.4
 
  
 
113.1
 
  
 
76.5
 
  
 
108.8
 
Environmental rehabilitation costs
  
 
17.6
 
  
 
25.1
 
  
 
12.7
 
  
 
18.2
 
Long-term incentive plan
  
 
0.1
 
  
 
0.1
 
  
 
—  
 
  
 
—  
 
Current liabilities
  
 
503.8
 
  
 
717.8
 
  
 
451.3
 
  
 
641.5
 
Related entity loans payable
  
 
480.4
 
  
 
684.5
 
  
 
439.0
 
  
 
624.1
 
Trade and other payables
  
 
17.5
 
  
 
24.9
 
  
 
7.7
 
  
 
10.9
 
Current portion of lease liabilities
  
 
5.9
 
  
 
8.4
 
  
 
4.6
 
  
 
6.5
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total equity and liabilities
  
 
650.5
 
  
 
926.9
 
  
 
566.3
 
  
 
805.1