Gold Fields Sells Stake in Top Chinese Miner

Gold Fields has spent 205m on Sino Gold to date, she said. The figure of 282m is based on Eldorado Gold's closing share price on Tuesday.

The move to exit Sino Gold is surprising as China has overtaken SA as the world's biggest gold producer in the past two years and Sino Gold is one of the most advanced foreign miners in the country.

The company, which is listed in Australia and Hong Kong, owns 82% of the Jinfeng mine, which will be one of China's biggest gold mines when it reaches full production of 180000oz a year.

Gold Fields took an initial 8% in the company several years ago which it raised to 14% in 2006 and 19,9% a year ago.

Sino Gold's shares were trading at A6,50 this week but were above A8 early last year.

Gold Fields said in a regulatory statement it had exchanged its stake in Sino Gold for 27,8-million Eldorado Gold shares, equivalent to 7% of Eldorado. Catrakilis-Wagner said the lock-up period on the shares, which refers to the minimum time Gold Fields has to hold them, was four months.

Asked whether Gold Fields would be a long-term investor in Eldorado Gold, she said "you can draw your own conclusions from the fact that we hold only 7%".

Eldorado Gold is listed on the Toronto Stock Exchange and, apart from its operations in China, is involved in mining and exploration in Turkey, Brazil and Greece.

In China, it holds 90% of the Tanjianshan Mine in central China, which is expected to produce about 100000oz of gold this year at a cost of 385/oz.

Gold Fields CEO Nick Holland said the transaction did not alter the group's objective of growing its global production in west Africa, South America and Australasia to about a million ounces a year in each region within three to five years.

Although Gold Fields was selling its equity stake in Sino Gold, it would retain its exploration joint ventures with the company, some of which had delivered positive results so far, Catrakilis-Wagner said.

The group was also not diluting its exposure to China by investing in a more diversified resources group, she said, because it intended to deploy its own team in the country.

They would be looking for both grassroots opportunities and operational mines but had not yet found anything that offered value for shareholders.

The transaction requires regulatory approval, including from the SA Reserve Bank. It is expected to be completed by the end of August.

Gold Fields shares closed 4% or 424c weaker at R104,36 yesterday, slightly more than the 1%-2% falls seen in AngloGold and Harmony's share prices, as the gold price shed 0,5% to 9 76/oz and the rand remained strong at R8,08/dollar.

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