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Gold Fields secures cut in tax, royalty bills from Ghana on 2 gold mines

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Gold Fields secures cut in tax, royalty bills from Ghana on 2 gold mines

Gold FieldsLtd. said March 29 that it has concluded a development agreementwith government of Ghana which results in improved terms for both of itsTarkwa andDamang goldmines in the African country.

The agreement included a reduction in corporate tax ratefrom 35% to 32.5% with effect from March 17. In addition, the company will pay asliding scale royalty based on the gold price with effect from Jan. 1, 2017,from a flat 5% of revenue previously. Assuming the gold price of US$1,300 perounce, the royalty rate will be 3%, the company said. Higherprices would see the royalty rate rise to a maximum 5% should gold reach US$2,300per ounce or higher.

The new terms will apply to Tarkwa for 11 years for Tarkwaand to Damang for nine years, each renewable for a further five years.

"This is obviously a positive input into ourdecision-making process, though we are considering many other economic,financial and mining variables in the process," Reuters cited companyspokesman Sven Lunsche as saying. However, the company has yet to decidewhether to spend more capital on Damang mine or suspend operations, wherearound 2,000 jobs would be at risk.