TORONTO (miningweekly.com) – South Africa-based gold major Gold Fields has completed the acquisition of world number-one gold producer Barrick Gold’s Yilgarn South assets, in Western Australia.

The Yilgarn South divestiture was part of Barrick's ongoing portfolio optimisation process to increase free cash flow, in line with the company's capital allocation framework.

Gold Fields acquired the assets for $270-million after adjustments for working capital, mine capital and employee entitlements. The company paid for half of the transaction in 28.7-million of its common shares at a volume-weighted average price of $4.70 apiece based on the five last trading days of September.

The Yilgarn South assets comprises the Granny Smith, Lawlers and Darlot mines, which in 2012, produced a total of 452 000 oz at all-in sustaining costs of $1 137/oz, and in the first half of 2013 produced 196 000 oz at all-in sustaining costs of $1 145/oz.

Based on reported production for the first half of 2013, the newly acquired assets were expected to add about 400 000 oz of production to the Gold Fields portfolio, at costs lower than the current group average, CEO Nick Holland commented.

“Today, we commenced integrating these assets with our existing operations in Western Australia where Gold Fields now has five active mines,” he said.

Yilgarn South contained proven and probable reserves of 2.6-million ounces, measured and indicated resources of 600 000 oz and inferred resources of 1.2-million ounces as at December 31, 2012.

Australia is now Gold Fields’ biggest contributor to the group’s output, accounting for 42% of global production.

Meanwhile, Barrick said the proceeds of the transaction would be used for general corporate purposes, including debt repayment, and would be recorded in the fourth quarter. The company also maintained its 2013 gold output guidance of 7-million to 7.4-million ounces at all-in sustaining costs of $900/oz to $975/oz, which were the lowest costs of its senior peer group.

UBS Securities Canada and BofA Merrill Lynch acted as financial advisers and Australian law firm Clayton Utz acted as legal counsel to Barrick.