Johannesburg - Gold Fields sold two assets worth $732 million (R5 billion) last week, raising as much as $380 million in cash, which the gold producer plans to use to cut its substantial debt position, fund its large capital investments or complete an acquisition.
Nick Holland, Gold Fields chief financial officer, said on Friday the mining house had net debt of $1 billion compared to its targeted range of between $500 million and $750 million.
In the two years to June 2009, Gold Fields has budgeted $1.8 billion for capital expenditure at South Deep, Driefontein and Kloof gold mines in South Africa, the Cerro Corona copper and gold project in Peru and at the Tarkwa mine in Ghana.
Holland denied that Gold Fields had sold the two assets because of a need for cash given its debt and capital expenditure plans.
"We have been very confident about our debt position and we have massive head room to assume a lot more debt," he added.
On Friday, Gold Fields aborted its failed entry into Venezuela after 19 months when it sold off its gold mining assets consisting of the Choco 10 mine as well as mineral rights to Toronto-listed Rusoro Mining for $532 million.
Gold Fields acquired the Venezuelan assets in March last year for $360 million and its total investment these operations has been $425 million.
The Venezuela sales follows close on the heels of Gold Fields sale of its stake in the Essakane gold project in Burkina Faso for $200 million on Wednesday. Gold Fields has spent $47 million on Essakane.
In November 2005, when Gold Fields started its bid for Bolivar Gold, which held the Choco 10 mine, Ian Cockerill, Gold Fields chief executive, said the acquisition would give the group access to a "highly prospective gold district" and that the Choco 10 mine would give Gold Fields a "strong operational foothold" in that part of the world. However, these high hopes failed to materialise.
On Friday, Cockerill said Gold Fields was not prepared to make any further investment at Choco 10 and would rather have an exposure to the project through an equity holding in Rusoro. Gold Fields will receive a 38 percent stake in Rusoro as a result of the sale.
Willie Jacobsz, a Gold Fields spokesperson, conceded that the first move into Venezuela had not been a success.
He said over the past 12 to 18 months, the "socio-political risk" in Venezuela had increased since Gold Fields bought the Choco 10 mine.
Bloomberg on Friday quoted Rusoro as saying that its Russian shareholders would use their relationship with Venezuela's President Hugo Chavez's government to help resolve some problems that prevented Choco 10 from achieving its production targets.
The mine has been hit by equipment breakdowns, strikes and failed to get a water permit.
On Friday, Gold Fields lost 0.47 percent to R126.40 on the JSE. The gold mining sector slipped 044 percent.