Gold Fields Limited (JSE, NYSE: GFI) (“Gold Fields”) and Yamana Gold Inc. (TSX:YRI; NYSE:AUY; LSE:AUY) (“Yamana”), today announced that they have entered into a definitive agreement (the “Arrangement Agreement”), under which Gold Fields will acquire all of the outstanding common shares of Yamana (“Yamana Shares”) pursuant to a plan of arrangement (the “Transaction”).
Under the terms of the Transaction, all of the outstanding Yamana Shares will be exchanged at a ratio of 0.6 of an ordinary share in Gold Fields (each whole share, a “Gold Fields Share”) or 0.6 of a Gold Fields American depositary share (each whole American depositary share, a “Gold Fields ADS”) for each Yamana Share (the “Exchange Ratio”).
The Transaction implies a valuation for Yamana of US$6.7 billion and represents a premium of 33.8% to the 10-day Volume-Weighted Average Price (“VWAP”) of Yamana’s Shares of US$ 5.201 on Friday, May 27, 2022, being the last trading day on the NYSE prior to the date of this announcement, based on the 10-day VWAP of Gold Fields ADSs of US$ 11.592. Upon 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.
The acquisition of Yamana by Gold Fields significantly strengthens the ability of the combined company (the “Combined Group”) to deliver on Gold Fields’ three strategic pillars: maximizing asset potential; advancing ESG commitment; and growing the value and quality of its asset portfolio. The Combined Group has the potential to create significant long-term value for shareholders through greater scale, an industry-leading portfolio of assets, an enhanced production profile with significant growth potential, operational and geological synergies, and a strengthened financial profile for future growth and shareholder returns.
Gold Fields’ Board believes that offering the Gold Fields Consideration Shares is the best way to capture and unlock growth opportunities while still maintaining financial flexibility, capital and operational discipline, and providing attractive returns to shareholders. Strong near-term operating cash flows from Gold Fields’ producing assets complement the manageable capital requirements of Yamana’s world class, high return project portfolio, providing greater capacity to fund the combined growth pipeline internally, while maintaining shareholder returns in line with Gold Fields’ existing policy.
- As traded on the New York Stock Exchange (NYSE)
- As traded on the NYSE
Yamana is a natural strategic fit for Gold Fields, with its high quality, diversified portfolio of long life assets located in mining friendly rules-based jurisdictions across the Americas (including its five producing mines and pipeline of development projects and exploration properties) and with a shared focus on health and safety and ESG performance.
With the combination of Gold Fields’ and Yamana’s portfolio of assets, Gold Fields will become a new global gold major able to create value at every stage of its pipeline.
The Combined Group will maintain its presence in all regions while continuing to honour commitments to stakeholders. Gold Fields believes that this Transaction offers employees and communities more opportunities in the long-term given its track record of ongoing investment in the regions in which it operates.
The Transaction has been unanimously approved by the Board of Directors of both Gold Fields and Yamana and is expected to close in the second half of 2022 subject to and following the satisfaction of the conditions precedent to the Transaction. Gold Fields will remain headquartered in Johannesburg.
The acquisition will be implemented by way of a plan of arrangement of Yamana under the Canada Business Corporations Act (“CBCA”) pursuant to the Arrangement Agreement entered into between Gold Fields and Yamana dated 31 May 2022. The consideration payable (the “Transaction Consideration”) to the shareholders of Yamana will consist of either, at the election of a Yamana shareholder, newly issued Gold Fields Shares or newly issued Gold Fields ADSs, which each represent one Gold Fields Share, in accordance with the Exchange Ratio. The Gold Fields Shares are listed on the Johannesburg Stock Exchange (“JSE”) and the Gold Fields ADSs are listed on the NYSE.
Chris Griffith, Chief Executive Officer of Gold Fields said: “Today we are announcing the acquisition by Gold Fields of Yamana, two companies with complementary portfolios, cultures and strategic priorities. The result is a combination with much greater capacity and potential value than the sum of its parts. Each company brings with it a unique set of skills and geological knowledge, enabling the Combined Group to enhance its assets more efficiently over the long-term than they could as separate companies.
“Today’s announcement is the result of a robust and extensive process carried out by the Gold Fields’ Board and management team to identify the optimum solution to support our revised strategy. 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-4 global gold major, well positioned to deliver long-term value creation. Combined, Gold Fields will boast an industry leading portfolio of high-quality, long-life flagship assets that span some of the world’s most established gold mining jurisdictions.
“Like Gold Fields, Yamana is focused on operational delivery, disciplined capital allocation, portfolio management, maximising shareholder returns, and upholding leading sustainability, safety and ESG performance. These shared priorities are foundational to this Transaction.”
Peter Marrone, Executive Chairman of Yamana Gold said: “This is an outstanding opportunity for our shareholders, employees and the local communities in which we operate throughout the Americas. The Transaction delivers an immediate and compelling premium for Yamana Shareholders, reflecting the inherent fair value of our assets, while also offering an opportunity to benefit from the creation of a new global gold producer with an attractive value proposition.
“We saw significant merit in pursuing discussions with Gold Fields because of the quality of their company on a standalone basis and because of the quality a combination would create. After many months of discussions and conduct of diligence, including site diligence, over a period beginning late last year, we felt even more certain in our premise that Gold Fields was a high-quality standalone company and the company resulting from the combination would be even better. We were also encouraged and influenced by Gold Fields’ conclusions, after their extensive diligence, of what was our inherent, fair value.
“The combination of Yamana and Gold Fields creates a world-class, globally diversified company with regional relevance across premier, rules-based mining jurisdictions that is underpinned by low cost, long life mines. The combined entity will be well positioned to deliver long-term value creation with its enhanced scale, management strength and improved capital markets profile. Yamana and Gold Fields also have complementary corporate cultures and values with an ESG-first operating model with a strong focus on supporting host communities and environmental stewardship.
“We believe that Yamana’s shareholders’ ownership of the Combined Group reflects the fair value of the contribution that each company brings.”
Strategic Rationale for Gold Fields
The Transaction has a compelling strategic rationale and is expected to provide considerable benefits to the shareholders of Gold Fields (“Gold Fields Shareholders”), shareholders of Yamana (“Yamana Shareholders”) and the Combined Group’s employees and stakeholders. The Transaction will bring together two highly complementary gold portfolios with an enhanced long-term value proposition, centred around:
- Growing the value and quality of our portfolio of assets with an industry-leading combined portfolio of high-quality assets comparing favourably to the scale, cost and life of the premium-rated majors, and an appropriate balance of existing production with future growth;
- Enhanced geographical diversification with a combined portfolio of high-quality assets across the world’s premier mining jurisdictions in South Africa, Ghana, Australia, Canada, and South America, with risk mitigated through a balanced geographical spread and majority exposure to OECD countries;
- Strengthened financial position driven by Gold Fields and Yamana’s highly complementary cash flow generation profiles with strong near-term operating cash flows from producing assets, healthy balance sheets and staggered major capital investment cycles providing the Combined Group with greater capacity to fund its project pipeline without compromising balance sheet flexibility or shareholder returns;
- Industry-leading growth pipeline combining Gold Fields’ track record in portfolio optimisation and project development with Yamana’s current assets and deep pipeline with accelerated growth potential. The Combined Group will benefit from the near-term growth of Gold Fields’ Salares Norte and South Deep mines, and longer-term growth from Yamana’s Wasamac, Malartic Odyssey and MARA projects as well as additional opportunities in Yamana’s high-quality exploration pipeline;
- Complementary cultures and aligned strategic priorities with shared values as disciplined, value-driven companies focused on operational delivery, capital allocation, portfolio management, responsible growth and shareholder returns underpinned by a strong focus on people, particularly their safety, and upholding leading sustainability and ESG performance. The Combined Group will continue to commit to Gold Fields’ 2030 decarbonisation, environmental, safety and health, diversity and stakeholder value creation targets; and
- Initial target pre-tax synergies of approximately US$40 million per year anchored in operational integration, as well as potential financing synergies and a streamlining of overhead cost structures.
Strategic Rationale for Yamana
For shareholders of Yamana, the Transaction presents compelling rationale including:
- Company scale with Yamana Shareholders retaining approximately 39% ownership in the combined top tier, globally diversified, senior gold producer, ranked highest by reserve life index relative to senior gold peers, third largest by gold production in 2024, and fourth largest by market capitalization;
- International presence and regional relevance with 14 mines providing regional relevance across premier, rules-based mining jurisdictions including North America, South America, Africa and Australia;
- Management strength with the Combined Group offering Yamana Shareholders industry leading management bench strength which shares the philosophy of managing regionally dominant platforms. Gold Fields’ management provides significant experience in certain geologies such as paleo placer deposits which could unlock the full value of the Jacobina gold belt in addition to significant experience in advancing projects which will be of strategic significance in the advancement of Yamana’s portfolio of world class development assets;
- Enhanced capitalized position along with exposure to significant near-term production and cash flow growth from Gold Fields’ portfolio, improving the ability to deliver a leading growth profile through Yamana’s high return, project pipeline including MARA, Odyssey, Wasamac, Jacobina’s phased expansion in addition to further opportunities throughout the portfolio;
- Realization of inherent fair value, crystallizing value for Yamana Shareholders while allowing for upside appreciation from further growth and the potential re-rating of the combined portfolio.
Board of Directors’ Recommendations
Gold Fields has engaged financial and legal advisors, which are listed below. The Board of Directors of Gold Fields has unanimously approved the Arrangement Agreement. The Board of Directors of Gold Fields recommends that Gold Fields Shareholders vote in favour of the Transaction.
After consultation with its outside financial and legal advisors, the Board of Directors of Yamana has unanimously approved the Arrangement Agreement. The Board of Directors of Yamana recommends that Yamana Shareholders vote in favour of the Transaction. In addition, all of the Directors and Senior Officers of Yamana, have entered into binding voting support agreements with Gold Fields under which such individuals have agreed to support and vote their Yamana Shares in favour of the Transaction. The Board of Directors of Yamana has received fairness opinions from Canaccord Genuity Corp. and Scotiabank that, as of the date of each such opinion, and based upon and subject to the assumptions, limitations and qualifications stated in each such opinion, the Transaction Consideration to be received by Yamana Shareholders is fair from a financial point of view to Yamana Shareholders.
