Johannesburg - Gold Fields, the country's second-largest gold producer, yesterday opted to hold on to two of its more marginal operations in the Free State rather than take up a stake in Auriongold, the new company formed out of the merger of Goldfields of Australia and Delta Gold.
The company confirmed yesterday that exclusivity agreements between Gold Fields and Harmony, effectively trading St Helena and Oryx for Harmony Gold Mining's Auriongold stake, had lapsed.
Chris Thompson, the chairman and chief executive of Gold Fields, said the Auriongold assets were regrettably too "enthusiastically priced" for Gold Fields.
"At current gold prices St Helena and Oryx Gold Mines are valuable contributors to earnings," Thompson said.
Harmony had the rights to negotiate the acquisition of Gold Fields' St Helena and Oryx in the Free State in exchange for a reciprocal right to buy Harmony's 9.8 percent stake in Auriongold.
Harmony and its joint venture partner, African Rainbow Minerals (ARM), kickstarted the consolidation of the Free State gold fields with the acquisition of AngloGold's Freegold mines in November last year.
The acquisition of St Helena and Oryx, which are adjacent to mines owned by Harmony and ARM, was viewed as the next logical step in the Free State region's consolidation.
Nick Goodwin, a gold analyst at SG Securities and an expert on Free State gold mines, said Gold Fields had obviously made a strategic decision to keep the local mines within its stable.
Goodwin said the current rand gold price had seen the mines' margins balloon, making them far more valuable than the Harmony-ARM joint venture was perhaps willing to pay.
Gold Fields also had its hands full with its recent acquisition of WMC's St Ives and Agnew Gold Mines in Australia.
In the meantime, Harmony has made it clear that it will not be unhappy about holding on to the Auriongold stake, inherited through a 22.96 percent stake in a pre-merged Gold Fields.
Gold Fields' shares fell R3.20 to end at R99.80 in Johannesburg yesterday, and Harmony shares fell R4.20 to R118.