The Canada-based gold producer Yamana Gold agreed to a $6.7 billion takeover by South Africa’s Gold Fields Ltd.
Gold Fields, one of the world’s leading mining companies has agreed to buy Canadian Yamana Gold for 34% more than their 10-day average. The deal will give investors 61 percent ownership in what is currently Canada’s largest mine (Canadian Malartic mine) with Yamana shareholders holding the remaining 39%.
The agreement will allow both Gold Fields and Yamana to reduce costs amid the fastest inflation in forty years, as well as a slump in global demand. This is being impacted by China’s Covid lockdown along with the weaker-than-forecast Indian wedding season that was predicted earlier this year.
“The combination of Yamana and Gold Fields creates a world-class, globally diversified company with regional relevance across premier, rules-based mining jurisdictions that are 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, trending” said Yamana’s executive chairman Peter Marrone.
“Yamana and Gold Fields also have complimentary corporate cultures and values with an ESG-first operating model with a strong focus on supporting host communities and environmental stewardship,” he added. “We believe that Yamana’s shareholders’ ownership of the Combined Group reflects the fair value of the contribution that each company brings.”
Yamana shares were marked 8.22% higher from their Friday close in early New York trading to change hands at $5.60 each, while Gold Fields’ performance was much less impressive: it lost 20.66% to $9.68 each.
Spot gold prices are continuing their slow rise this year and were last seen trading at $1,848.30 per ounce. SPDR Gold Trust ETF (GLD) also experienced positive movement leading up until premarket trading Tuesday morning when they lost 0.2%. This would bring total advances since January 1st to around 2.6%.