Joining forces in China: Gold Fields and Sino Gold

Sino Gold and Gold Fields have formed a strategic alliance, combining Sino Gold’s proven and recognised operational, development and business capabilities in China with the global technical, financial and human resources expertise of Gold Fields, the world’s fourth largest gold company. As part of this, Gold Fields’ equity in Sino Gold will rise to 17.4%, the largest shareholder in Sino Gold. With a ‘first mover’ advantage, Sino Gold holds a strong competitive position in China.

China will be one of the topics we examine in International Mining’s February issue, along with the central African Copperbelt, Toronto and comminution.

The new 50:50 jointly owned and funded group to target and explore China for projects meets Gold Fields’ benchmark ‘rule of fives’ criteria: resources of at least 5 Moz of gold and production capacity of approximately 500,000 oz/y of gold. The group will integrate Gold Fields’ existing exploration assets and personnel in China into Sino Gold which, in terms of the strategic alliance, will in future conduct all of Gold Fields’ exploration activity in China.

Ian Cockerill, CEO of Gold Fields: “This strategic alliance represents the next logical step in the developing relationship between Gold Fields and Sino Gold, our long standing partner in China. It provides Gold Fields with the ability to strengthen and accelerate its exploration efforts for large, high quality, long life assets in a highly prospective region of the world. China is a key strategic region for Gold Fields and combining our technical, financial and human resources expertise with Sino Gold’s proven commercial and operational track record in China will create a stronger partnership to deliver on our mutual exploration and development objectives.

The strategic alliance will explore primarily for porphyry, high-sulphidation epithermal or sediment-hosted disseminated orogenic style gold mineralization. These styles of mineralisation are not currently the focus of Sino Gold’s exploration programme in China. Jake Klein, CEO of Sino Gold: “The exploration focus introduced through this alliance is a significant addition to, and separate from, Sino Gold’s current exploration programme.”

A new entity is being formed which will be equally funded by both parties. This is to be a wholly separate entity from Sino Gold’s other business development teams in China. All of China is included, except for Sino Gold’s projects around the Laizhishan Dome area near Jinfeng and White Mountain.

The exploration undertaken by the new entity will be managed by Sino Gold. Gold Fields will manage the development and operation of any new projects resulting from the alliance that meet the agreed Gold Fields benchmark criteria. Sino Gold has the right to properties which do not meet the criteria referred to above.

As one of the world’s largest unhedged gold producers, Gold Fields has annual gold production of some 4.1 Moz from mines in South Africa, Ghana, Australia and Venezuela, as well as a developing mine at Cerro Corona in Peru. The company has ore reserves of 65 Moz and mineral resources of 179 Moz.

Sino Gold has been active in China since 1996. Its Jianchaling mine produced about 450,000 oz of gold from 1998 to 2006. The company is now developing the Jinfeng mine in Guizhou Province that is expected to commence commercial gold production in the March 2007 quarter. With resources of 4.0 Moz and reserves of 2.9 Moz, Jinfeng will be a major, long-life operation. Sino Gold has demonstrated capability to gain approvals for, and to successfully develop, gold projects in China.