* Gold Fields forms Ghana JV with Canada's Asanko
* $202.6 million deal sends shares down 6 pct
* Bullion miner to fund transaction through cash and debt (Adds CEO quote, analyst comment on debt levels)
By Tanisha Heiberg and Nqobile Dludla
JOHANNESBURG, March 29 (Reuters) - South Africa's Gold Fields will buy a near 50 percent share of Asanko Gold Inc's Ghana subsidiary and take a stake in the Canadian miner in a $202.6 million deal, it said on Thursday.
The deal fits with Gold Fields' strategy of buying cash generative, working mines rather than embarking on costly greenfield explorations but some investors were not convinced, sending the company's shares tumbling as much as six percent.
"We are buying into an operation with cash flowing today so we expect this to have a strong impact on the overall cash flows over the next year or two," Gold Fields Chief Executive Nick Holland told Reuters.
The bullion miner plans to acquire half of Asanko Gold Ghana's 90 percent interest in the Asanko Gold Mine. Its Ghana subsidiary will also acquire associated properties and exploration rights in the west African country.
The deal includes an upfront payment of $165 million on closure of the transaction and a deferred payment of $20 million. Gold Fields will also take a 9.9 percent stake in Toronto-listed Asanko for $17.6 million in a share placement.
Gold Fields, whose net debt stood at $1.3 billion at the end of its last financial year, said it could fund the joint venture and the share subscription through cash and existing debt facilities. The company has $400 million in cash and another $1 billion in credit facility.
Asanko, which is expected to produce 253,000 ounces of gold annually from 2019 to 2023 with a life-of-mine of at least 15 years, also has the potential to make further discoveries, Gold Fields said.
However, investors were cautious about the deal with shares in Gold Fields falling more than the broader bullion sector - which was down 1.17 percent. They tumbled more that 6 percent before paring losses to weaken 3.39 percent to 47.24 rand by 1216 GMT.
"This is a low return (asset) and I think investors are hungry for returns in the form of dividends," said portfolio manager at Gryphon Asset Management Casparus Treurnicht.
"Unless Gold Fields have some plan to materially increase returns from the Asanko operation I do not see this as a breakthrough transaction."
But Gold Fields said the transaction would exceed its requirement of a 15 percent return at a gold price of $1,300 per ounce, with a payback period of five years.
Editing by Keith Weir