Gold Fields confident shareholders will back Yamana deal

Gold Fields, which has been drumming up support for the acquisition of Canadian rival Yamana in a mammoth $6.7bn (R122.7bn) deal, says it is confident that shareholders will back the transaction when they vote on November 22.

The acquisition is the largest outbound SA transaction yet and the third-largest SA deal since 2014, according to Bank of America (BofA) Securities, which acted as exclusive financial adviser for the transaction.

At least 75% of Gold Fields shareholders need to vote in favour of the transaction to get it over the line.

The potential tie-up comes as Gold Fields and other mining companies look for other revenue sources beyond the traditional SA market where ore grades have been declining while costs have escalated.

“We have engaged extensively with our shareholders over the past few months. We think we have articulated our position regarding the rationale behind the deal, which represents our next phase of growth strategy,” CEO Chris Griffith said in a media briefing after releasing a circular to shareholders providing full details of the transaction, as well as an independent valuation report.

“The assets and capabilities of Yamana are strategically aligned to that of Gold Fields. This commonality provides the potential to add significant value by applying Gold Fields’ core competencies and key strengths, such as underground mining, project development, brownfields exploration and asset optimisation, to realise the full potential of Yamana’s portfolio.”

The proposed merger has not been without controversy, which led to the value of Gold Fields shares crashing 20% when news of a potential deal was first announced late in May, with some analysts saying the company was overpaying for Yamana.

Gold Fields is looking to gain full control of the Toronto-based miner in a share exchange at a ratio of 0.6 Gold Fields shares for every Yamana share.

This would add five producing mines to Gold Fields’ network, bringing the total number of operating assets to 14, as well as a pipeline of development projects and exploration properties. By output, Gold Fields will be behind only Barrick Gold, Newmont and Agnico Eagle.

Gold Fields hived off three deep-level, labour-intensive mines in SA to create Sibanye-Stillwater in 2013, leaving it with South Deep in SA and a large international footprint in Australia, Ghana and Peru.

The shares ended little changed at R145.06 on the JSE on Monday, giving the group a market value of R129.3bn.

mahlangua@businesslive.co.za