By: Ecofin Agency

Tarkwa's mining lease, which is due to expire in April 2027, may not be renewed in Ghana despite a request from operator Gold Fields. That is according to information reported by Bloomberg on Friday, June 19, which said the government is considering eventually transferring the mine's operations to local companies.

The prospect adds uncertainty over the South African group's interests in the asset, as well as those of investors exposed to its performance. Ghana's second-largest gold mine after Newmont's Ahafo operation, Tarkwa has been operated by Gold Fields since 1993. The South African group currently owns 90% of the mine, while the remaining 10% is held by the Ghanaian state.

That majority stake also makes Tarkwa an asset indirectly owned by the many investors holding shares in Gold Fields, most of whom are located in South Africa and the United States. South African investors account for 24.17% of the group's share capital, led by the Public Investment Corporation, the state-controlled asset manager, alongside other investors including M&G Investment Managers, Satrix Managers and Old Mutual Investment.

U.S. investors hold 17.18% of the company's share capital, led by asset manager Van Eck Associates. Other nationalities represented among Gold Fields shareholders include investors from Ireland, Canada, the United Kingdom and Australia. These investors do not receive dividends directly from Tarkwa, unlike the Ghanaian state, which benefits from its direct stake. They nevertheless remain exposed to developments affecting the mine because such developments could influence Gold Fields' overall results, including in the event the company loses control of the asset. Their influence is exercised primarily through voting rights, which allow them to participate in the group's major strategic decisions.

Plans Yet to Be Clarified...

For Gold Fields and its investors, the recent disclosures represent a warning sign. Whether those reports will ultimately be confirmed remains uncertain. Sources cited by Bloomberg said discussions were still at a preliminary stage within the Ghanaian government, and the option of renewing the lease has not been completely ruled out.

The alternative scenario would see a refusal to extend the concession result in a tender process for local mining companies, paving the way for a transfer of the asset.

Gold Fields is already familiar with this mechanism. Earlier this year, the Ghanaian government used the same approach to transfer the Damang gold mine to local company Engineers & Planners, following a transition agreement reached after more than two decades of operation by the South African group.

The context is significantly different for Tarkwa, however. While Damang was a mine nearing the end of its life, Tarkwa remains a mature operating asset with an estimated remaining mine life of 17 years, making the stakes surrounding its future considerably higher.