Gold Fields open to Harmony deal on W.Areas

By Eric Onstad

NEW YORK (Reuters) - The world's fourth biggest gold producer, Gold Fields Ltd. (GFIJ.J: Quote, Profile, Research, Stock Buzz), said on Wednesday it was open to a possible merger of a mine owned by South African rival Harmony Gold Mining Co. Ltd. (HARJ.J: Quote, Profile, Research, Stock Buzz) into a firm in which both have stakes.

A bitter takeover battle last year in which Gold Fields fought off a hostile bid by Harmony would not obstruct possible cooperation, Gold Fields Chief Executive Officer Ian Cockerill told the Reuters Global Mining and Steel Summit in New York.

Both companies are battling for exposure to South Africa's massive South Deep gold deposit and have both recently taken stakes in 50-percent owner Western Areas WARJ.J.

Harmony Chief Executive Bernard Swanepoel has suggested that Western Areas might merge with Harmony's Target mine, which like South Deep is a very deep-level mine.

"Bernard had mentioned that and my comment to him is if you want to do that, then it simply becomes, 'What is the value proposition?'" Cockerill said by telephone from Johannesburg.

"If we felt there was merit to the proposal and it added value, of course we would listen to it, but if it was being done on the cheap, we would look at it very carefully," he added.

There might be merit in the argument that Western Areas should diversify from being a one-mine company, he added.

During the rancorous hostile bid battle last year, Gold Fields accused Harmony, the world's fifth biggest gold producer, of making an offer that sharply undervalued the company.

The companies have been thrown together in recent months after both bought stakes in Western Areas. Harmony bought a 29 percent stake in March and Gold Fields snapped up a 15.5 percent holding last month.

South Deep -- a 50-50 joint venture of Western Areas and Canada's Barrick Gold Corp (ABX.TO: Quote, Profile, Research, Stock Buzz) -- has a resource of 67 million ounces, the biggest of any gold mine in the world.

Gold Fields said it bought a stake to insure that its Kloof mine -- adjacent to South Deep -- was able to participate in the second stage of South Deep's development.

Cockerill said Gold Fields had held talks with various role players regarding Western Areas and South Deep, but declined to give details.

"Informal discussions have taken place post the acquisition and certainly I see discussions being put on a higher level."