© Stocksak. FILEPHOTO: A worker holds the South Africa’s Gold Fields South Deep mining site in Westonaria. It is 45 kms south-west, Johannesburg, South Africa. March 9, 2017. REUTERS/Siphiwe Sibeko
(Stocksak). – An independent assessment has been made Yamana Gold (NYSE:). The mineral assets of (NYSE:), are between $6 billion to $8 billion, which is in line with South Africa’s Gold Fields’ (NYSE:). Circulars issued late Friday revealed that the Canadian miner was initially offered a price of $6 billion to $8 billion.
Yamana was purchased by Gold Fields, in an all share transaction valued at $6.7 Billion.
Investor concerns about Yamana’s dilutive nature sent Gold Fields shares plummeting 20% the day after the announcement.
After the share slump, the gap between Yamana’s share prices and Gold Fields’ offer has narrowed.
According to circulars, a valuation report prepared by CIBC World Markets Inc. in August 30 had valued Yamana’s mineral assets, which includes 50% of Canadian Malarctic – one of the largest gold mines in the world – at between $6.825 and $8.025 billion.
CIBC is Canada’s largest investment bank.
Yamana and Gold Fields did not provide financial projections, but used 2021 financial reporting to show that the combined entity would have generated $6 billion in revenue and $744 Million annually profit if it was completed on January 1, last year.
Both boards of both firms unanimously supported the transaction. It would result in Gold Fields owning 69% and Yamana shareholders 31%, respectively.
Directors stated that the combined company would be a top-4 global major in gold with a diverse portfolio of high-quality assets with tangible near- and long-term growth potential.
Gold Fields claims Yamana gives them a valuable foothold in North America, and brings new assets to the table at a time when the industry is facing depleting reserves.
Yamana and Gold Fields shareholders are expected to vote on the deal on November 21 and 22, respectively.
The transactions must be approved by 75% of Gold Fields shareholders. Yamana requires 66.67% support.