GOLD Fields has secured tax and royalty concessions in Ghana, which would have netted it savings of $33m at its two mines last year, and will feed into its deliberations about the future of its Damang mine.
Gold Fields bore the brunt of upward tax revisions a number of years ago, with the bulk of mining companies operating in Ghana shielded by stability agreements. About three years ago, the JSE-listed gold miner started talks with the government to ease its tax burden.
As of March 17, Gold Fields’ corporate tax was lowered to 32.5% from 35%, and it will pay royalties on a sliding rate, depending on the gold price in dollars, with a 3%-5% range, a change from the flat 5% charge on revenue.
Based on the performance of its opencast Damang and Tarkwa mines in Ghana last year, this would have resulted in a $45/oz reduction in all-in costs, translating to a $33m saving.
Gold Fields calculated there would be a 5% saving on all-in costs at Tarkwa over a 15-year life of mine, spokesman Sven Lunsche said.
The reduced payments to the government would also feed into the review of Damang, which Gold Fields CEO Nick Holland said late last year could either be put onto care and maintenance, or have an injection of capital to widen the 10-year-old pit and extend its life.
“The question is whether the gold price is actually high enough for us to have the guts to spend the money at this stage,” Mr Holland said last month.
The results of the review would be unveiled in May.
Asked what the revised fiscal regime entailed for Damang, Mr Lunsche said: “It could potentially have a positive impact on our deliberations.”
The Ghanaian authorities would be loath to see another gold mine close after AngloGold Ashanti suspended its Obuasi mine last year as it develops a new plan at the perennially loss-making mine, and seeks a partner to restart the operation. For the year ahead and, based on a forecast output of 560,000oz this year and a $940/oz all-in cost, with a 5% saving on the reduced taxes and royalties, it should produce savings of $26m for the year.
Meanwhile, the full court of the federal court of Australia overturned a 2014 court decision that the regranting of St Ives tenements to Gold Fields in 2004 had not complied with the Native Title Act.
The court ruled the regranting was valid, but Gold Fields said it was uncertain whether the Ngadju People, who had brought the court action, would appeal.
Credit: Business Day