Asanko Gold has declared its operations as debt free after concluding a joint venture agreement with GoldFields in which it will be paid $165m in upfront cash with the balance of $20m to be paid no later than December 31, 2019.

In terms of the joint venture, unveiled by GoldFields, Asanko Gold sold a 50% stake in Asanko Gold Mines (AGM), its Ghanaian subsidiary. The amount is enough to retire $164m in debt which at LIBOR of 6% was expensive.

GoldFields also participated in the recapitalization of Asanko Gold, subscribing for shares through a rights issue giving it a 9.9% stake for $17.6m. All in all, Gold Fields is spending $202.6m for roughly 100,000 oz of gold annually on current production metrics.

Peter Breese, president and CEO of Asanko Gold, said the company would now “emerge debt-free, with a strong partner, a solid long-life production base, competitive cost profile, fully funded organic growth and significant exploration potential”.

The debt was provided by Red Kite which had provided some $150m in 2013 for Asanko Gold’s $286m Asaase gold mine. The loan deal was structured around an off-take agreement in which its subsidiary, Re Kit Mine Finance, had a nine-day window in which to pay the lowest gold price once the gold has been shipped to a refinery.

GoldFields Ltd completed a joint venture transaction with Asanko Gold, with Gold Fields acquiring a 50% stake in Asanko’s 90% interest in the Asanko gold mine in Ghana.

GoldFields and Asanko have established various working groups to ensure that the Asanko mine continues to operate in an efficient manner.

Nick Holland, CEO, said: “The closing of the transaction with Asanko gives us exposure to a great camp, with long-life, low-cost production, with significant exploration potential in a country we know well and have operated in for 25 years.”

“The Joint Venture bolsters the Ghana region, with Tarkwa providing the base load production and Damang providing growth through the reinvestment plan currently underway. We look forward to working closely with our new partners,” he added.