Gold Fields aims to cut debt by $300-m over two years

JOHANNESBURG (Reuters) – Gold Fields Ltd aims to cut its debt by $300 million over the next two years, it said on Thursday, a move that would give South Africa's No.2 bullion miner ample headroom for potential acquisitions.

The company's borrowings totalled $1.6 billion as at the end of June, putting its net debt to core profit, or EBITDA, at 1.47 times – well below the 2.5 times level agreed with creditors.

"I think our debt is too high. We would like to get our debt down to about one times EBITDA. That means that we've got to actually shed another $300 million of debt over the next two years," Nick Holland, Gold Fields's chief executive, said in an emailed presentation.

Gold Fields, which also operates in Australia, South America and Ghana, is on a drive to boost cash flow, pay dividends, sell non-core and underperforming assets, and fund growth through bolt-on acquisitions of in-production assets.

"I really don't think we need to get bigger in terms of production – any acquisition will have to be aimed at growing our free cash flow and total returns to shareholders," Holland said.

Since spinning off the bulk of its South African operations last year into a new company called Sibanye Gold, Gold Fields has been selling off explorations projects to focus on projects that can meet its operating margin target of 15 percent.

Last month, Gold Fields sold its controlling stake in a Peru mine for $81 million, two months after offloading its 85 percent interest in a Malian project. Earlier this year, it disposed of its interest in the Talas project in Kyrgyzstan.

Holland said he was keeping an eye on its Darlot mine in Australia and Damang in Ghana, neither of which has hit the 15 percent margin target.

"Both of those mines are showing very promising potential that they will be able to achieve our target over the next couple of years," he said. "If they can't make it, then ultimately they won't be in the portfolio."