Gold Fields (GFIJ.J) and AngloGold Ashanti (ANGJ.J) have agreed to merge their neighbouring Tarkwa and Iduapriem mines in Ghana to create Africa's biggest gold mine, the two companies said on Thursday.
Their move shows how gold miners are looking to consolidate as companies seek to replace depleting reserves and contain cost pressures.
Last month, U.S.-based Newmont Corp (NEM.N), the world's top gold producer, bid $16.9 billion for Australia's Newcrest Mining (NCM.AX), triggering speculation of a new wave of mergers and acquisitions in the industry.
In a joint statement, the two miners said the deal would see Gold Fields and AngloGold owning 67% and 33% of the joint operation, respectively, excluding the 10% stake the Ghanaian government holds in Tarkwa.
The joint venture would produce an average 900,000 ounces annually over the first five years and 600,000 ounces over its estimated 18-year life of the mine, the companies said.
"The proposed joint venture would create the largest gold mine in Africa and one of the largest in the world. It will be a high-quality operation, supported by a substantial mineral
endowment and an initial life spanning almost two decades," the companies said.
The combined operation's all-in sustaining costs (AISC), an industry measure, would be less than $1,000 per ounce for the first five years and less than $1,200 per ounce over the estimated life of mine.
Tarkwa produced 531,600 ounces in 2022 at AISC of $1,248 per ounce, while Iduapriem produced 248,000 ounces at a cost of $1,299 per ounce.
Gold Fields, which failed in its bid to acquire Canada's Yamana Gold (YRI.TO) last year, has said it will no longer purse big M&A deals, but will seek incremental growth through smaller transactions. AngloGold CEO Alberto Calderon has also said the company prefers internal growth to acquisitions.
Apart from Tarkwa, Gold Fields has two other mines in Ghana, Damang and the 45%-owned Asanko. AngloGold also has another mine in Ghana, Obuasi, in addition to Iduapriem.