Gold Fields addresses growth with $6.7bn all-share bid for Canada’s Yamana Gold

Gold Fields CEO, Chris Griffiths

GOLD Fields today unveiled an all-share bid for Canada’s Yamana Gold valuing the company at $6.7bn and creating a gold producer with combined output of 3.2 million ounces of gold a year.

The transaction, which has the support of the Yamana board, addresses CEO Chris Griffith’s strategic aim of sustaining Gold Fields’ production beyond 2028 and builds on the group’s South American presence.

“Yamana’s high-quality asset base in the Americas and strong development and exploration pipeline will further diversify the geography of our portfolio, creating a top four global gold major, well positioned to deliver long-term value creation,” said Griffiths in a statement.

Gold Fields shares were some 12% weaker in early morning trade on the Johannesburg Stock Exchange.

Earlier this month, Griffith hinted Gold Fields was on the acquisition trail saying that Gold Fields was inspecting potential acquisitions in South America. “We are looking at assets and some make sense to us,” he said.

The company currently operates the Cerro Corona mine in Peru and is building Salares Norte, an $860m project situated in Chile.

Yamana operates in Brazil, Chile and Argentina as well as Canada. Production in 2021 totalled 885,000 ounces as well as silver (production just over one million in equivalent gold oz). Gold Fiels said the combined group will be headquartered in Johannesburg.

The structure of the transaction is that Gold Fields will offer 0.6 of its shares for each Yamana share representing a premium of 33.8% to the 10-day volume-weighted average price of Yamana’s Shares of $5.201 on May 27. On closing of the transaction, it is anticipated that Gold Fields shareholders and Yamana shareholders will own approximately 61% and 39% of the combined group, respectively.

Peter Marrone, executive chairman of Yamana Gold, said discussions with Gold Fields had started late last year. He said the company was “… certain in our premise that Gold Fields was a high-quality standalone company”.

The deal is a bold step-out for Griffiths who joined Gold Fields from Anglo American Platinum in April last year. Whilst not averse to merger & acquisition activity, Gold Fields had in the latter years of previous CEO Nick Holland’s time focused on organic growth.

Production was to have peaked at 2.8 million ounces in 2027 before falling off steeply – an issue that Griffith said he was intent on addressing.

Yamana Gold produced 884,793 oz in gold last year at an all-in sustaining cost of $1,030/oz of which 357,392 oz in gold came from the firm’s 50% stake in Canadian Malartic – Canada’s largest gold mine – which it shares with Agnico Eagle.

The rest of output is from South American operations. El Peñón contributed 176,439 oz last year, an underground mine situated in Chile’s Atacama desert. The rest of production came from the Jacobina mine (186,439 oz) in Brazil, Cerro Moro (79,988 oz) in Argentina and Minera Florida (84,768 oz) in Chile.

Yamana Gold has guided to production of 870,000 oz this year.