Bloomberg News

Gold Fields, Lonmin Pare Debt Costs on $2 Billion of Loans

July 06, 2011

(Updates with Gold Fields loan margin in fourth paragraph.)

July 6 (Bloomberg) -- Gold Fields Ltd. and Lonmin Plc raised $2 billion from loans as rising raw material prices prompt lenders to slash debt costs charged to commodities firms.

Gold Fields, the world’s fourth-largest gold producer, arranged $1 billion of loans from 14 lenders including Barclays Plc, Bank of America Merrill Lynch, Bank of China Ltd. and BNP Paribas SA. Lonmin, the world’s third-largest platinum producer, got about $1 billion of dollar and South African rand- denominated loans to replace existing credit lines.

Miners are expanding production to benefit from precious metals prices. Gold gained for the 10th straight year in 2010, rising to a record $1,577.57 an ounce in May. Platinum rose 15 percent to $1,736.50 an ounce in the past year.

The five-year revolving credit line to Gold Fields pays initial interest of 120 to 160 basis points more than the London interbank offered rate depending on the amount drawn, according to data compiled by Bloomberg. The facility was oversubscribed by 1.33 times, Gold Fields said.

“The new loan bears a lower interest rate than the previous facility and significantly improves our debt maturity profile,” Johannesburg-based Gold Fields’ Chief Financial Officer Paul Schmidt said in an e-mailed statement today. The miner will replace existing financing due to mature in 2013.

Improved Pricing

Lonmin’s transaction comprised $700 million of five-year debt and about 2 billion South African rand ($296 million) of bilateral loans. The London-based miner will use the money to replace $875 million of existing loans with improved “pricing, credit margins and covenants,” Chief Financial Officer Simon Scott said today in a statement.

BNP, Citigroup, HSBC Holdings Plc, JPMorgan Chase & Co., Lloyds Banking Group Plc, Royal Bank of Scotland Group Plc and Standard Chartered Bank arranged the dollar portions of Lonmin’s deal. FirstRand Bank Ltd, Investec Plc and Standard Bank of South Africa Ltd. led the rand tranches.

Gold Fields’ lenders also include Bank of Tokyo-Mitsubishi UFJ Ltd., CIBC World Markets, Citigroup AG and JPMorgan, Gold Fields said in an e-mailed response to a query. The deal was mostly self-arranged, it said.

Gold Fields gained 2.45 rand, or 2.5 percent, to 99.45 rand as of 4:04 p.m. in Johannesburg, while Lonmin was little changed at 1,433 pence as of 3:05 p.m. in London.

A basis point is 0.01 percentage point.

--Editors: Cecile Gutscher, Chapin Wright

To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net. Carli Lourens in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net. John Viljoen at jviljoen@bloomberg.net


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