Gold Fields to weigh distributing $300m Yamana break-fee to shareholders among other options

Gold Fields CEO, Chris Griffith

GOLD Fields would consider distributing a $300m (R5.3bn) break fee from its failed takeover of Yamana Gold to shareholders as one of several options for the cash, said Chris Griffith, CEO of the group.

“It will be part of the normal capital allocation process which could include cash back to shareholders, investing in future options, and decreasing debt,” he said. “These are all great ways of returning value to shareholders.”

The adoption of a new dividend policy which was announced in July as a means of sweetening its bid for Yamana would remain intact, he said. This was an undertaking to pay out a higher range of normalised earnings of 30% to 45% compared to Gold Fields’ previous policy of 25% to 35% of normalised earnings . But an offer to pay at the higher end of that range in the first year of the consummated deal would fall away.

Speaking to media following his company’s decision to withdraw its all-share offer for Yamana Gold on Tuesday, Griffith said the break fee would “land in our bank account in the next two days”. Asked if the bid process for Yamana had been wasted time for Gold Fields, Griffith said not all was lost as the fee represented “a good return” for five months’ work.

Griffith bridled against questions that his job was in jeopardy, however. “The board has given its complete support to our strategy of increasing Gold Fields’ portfolio quality,” he said. “You will have to test that by asking the chairperson [Yumus Suleman].”

Gold Fields announced on Tuesday as part of its withdrawal of the Yamana offer that it would press on with looking for new assets. This was to address a one quarter decline in gold production from about 2027 to 2030. Griffith said the recent decline in the gold price and rising costs could open up new opportunities, or close them down.

Reflecting on the timing of the rival joint bid from Agnico-Eagle and Pan American Silver that eventually sank Gold Fields’ chances of buying Yamana – approximately three weeks ahead of the firm’s shareholder vote – Griffith said that most companies were at their most vulnerable following the publication of information circulars.

The circular detailed an independent valuation of Yamana, which roughly tallied with Gold Fields’ $6.8bn assessment at the time of deal announcement on May 31, as well as the group’s valuation of Yamana’s individual assets.

“You are opening up your lounge curtains and allowing everyone to see it,” said Griffith. “It was to be expected, I guess, because that’s when rival bids and interlopers can come in. They can see the value you’ve ascribed and then decide if they want to work alone or with another party.”

He acknowleged that Agnico-Eagle and Pan American offered the market operational synergies with Yamana, but added that: “I can’t see the value for Yamana”.

Agnico-Eagle is Yamana’s 50% partner on the Canadian Malartic mine while Pan American has a strong presence in South America where Yamana’s other mines and projects are located.