2022 – South African goldfields become 4th largest gold miner with Yamana deal By Reuters

Written by Nelson Banya

(Reuters) – South Africa’s Goldfields (NYSE: Ltd’s) is set to become one of the world’s four largest gold miners after it agreed to acquire the Canada-based company. Yamana Gold (NYSE:) in an all-share deal worth $6.7 billion, the largest in the region in years.

However, shares of the South African-listed miner fell 20% and investors expressed concerns about mitigation during a meeting with Gold Fields CEO Chris Griffiths and Yamana CEO Peter Marrone. Yamana shares rose 8.6 percent in the deal and were last up 4.2 percent.

Credit Suisse analysts said the premium for Gold Fields agreeing to pay for Yamana – 31% compared to the latest Yamana deal – was “significantly higher” than other recent gold deals.

ÔÇťWe are asking you to invest in this future value at what we believe is a very attractive premium,ÔÇŁ Griffiths told investors. “We don’t expect the market to embrace this deal immediately the way we did.”

The acquisition is the largest EMEA mining deal in a decade and South Africa’s third largest since 2014 – all in a sector that analysts say needs strengthening to cut costs.

Griffiths told Reuters in an interview that the deal gives Goldfields a desirable foothold in America. Gold Fields jumped to fourth in terms of gold production, behind Newmont, Barrick and Agnico Eagle (NYSE:).

Through the transaction, Gold Fields shareholders will own approximately 61% of the combined group, while Yamana shareholders will own approximately 39% upon closing of the transaction.

Marron said Goldfields is the best custodian of Yamana’s fortune.

Yamana, which produced 884,793 ounces of gold and 9.2 million ounces of silver in 2021, owns 50% of Canada’s largest gold mine, Canadian Malartec, and has operations in Chile, Brazil and Argentina.

Griffiths said Gold Fields has been watching Canada for a long time, as it has been looking for assets that would complement its growth strategy and provide synergies.

ÔÇťThat’s what Yamana Asset does, they tick all of these boxes for us. They bring in high-quality assets in Canada, Chile and Brazil through large pipeline projects especially in Canada and Argentina,” Griffiths said.

In addition to mines in South Africa, Australia and Ghana, Gold Fields operates the Cerro Corona mine in Peru and is developing the Salares Norte project in Chile, which is expected to start production in the first quarter of 2023.

ÔÇťWe will see some synergistic public savings and some savings by scaling up and integrating our assets in South America around supply chains,ÔÇŁ Griffiths said.

After a lull associated with the pandemic, consolidation activity in the gold industry has begun to pick up, driven by the need for growth and to support underperforming stock prices. Agnico Eagle Mines Ltd bought Canadian rival Kirkland Lake Gold (NYSE:) Ltd for more than $10 billion earlier this year.

Goldfields said the two companies’ boards of directors unanimously approved the deal and recommended that shareholders give the green light in a vote expected in late September.

Yamana shares will be delisted while Gold Fields will continue to trade in Johannesburg, where the combined group will be headquartered.