CIBC World Markets has valued the Canadian miner Yamana — which South Africa’s Gold Fields aims to acquire in an all-share deal — at between $6.825-billion and $8.025-billion. This independent assessment, outlined in a circular to shareholders, is in line with Gold Fields’ valuation, but it remains to be seen if the deal has enough shareholder support to go through. 

Gold Fields announced the proposed $6.7-billion all-share transaction at the end of May, and its share price was initially clobbered as the market regarded the offer as a stiff premium. The hope is that the CIBC assessment will assuage those jitters as deadlines loom for shareholder approval for the deal to be realised. 

To wit, CIBC’s valuation of Yamana’s assets ranges between $6.825-billion and $8.025-billion. Most of this value lies in the group’s 100% owned Jacobina mine in Brazil and its 50% stake in the huge Canadian Malartic operation.  

“The JSE requested Yamana to commission an independent valuation to provide Gold Fields’ shareholders with an understanding of the value that an independent valuation would provide. The big concern throughout this process was that Yamana was valued at the market cap of the day of $5.2-billion and we offered a 30% premium to that — there was concern that we were overpaying,” Gold Fields’ CEO, Chris Griffith, said during a conference call with journalists.  

“What we are seeing now is the underlying valuation on a fairly conservative basis has actually confirmed the value we have paid and has demonstrated upside,” Griffith said.  

Visit Daily Maverick’s home page for more news, analysis and investigations

Gold Fields has clawed back some of the value on its share price but is still down by about 23% from the end of May when the proposed deal was announced, though that is partly in line with its peers and the performance of the gold price, which is down by close to 12% over the same time frame.  

Asked about investors who were reducing their stakes, Griffith said that the company’s biggest shareholders had not changed in a material sense, which he took to be a signal of support for the company’s strategy.  

“Overall, our top shareholders have remained supportive shareholders, and largely, that shareholder base has not changed materially. So I think that is confirmation that our large shareholders have continued to be supportive. Some shareholders have sold a bit down but a number of shareholders have increased their holdings,” he said.  

Yamana’s shareholders will deliver their verdict on 21 November, and Gold Fields’ shareholders on 22 November. For the transaction to be approved, 67% of Yamana’s shareholders and 75% of Gold Fields’ must give the green light.  

The stakes are very high. Gold Fields sees the transaction as key to its growth plans. The company had been preoccupied with organic growth in recent years under former CEO Nick Holland, who set the company on its path of mechanised, global operations.   

Gold Fields faces a likely fall in production from an expected peak of 2.8 million ounces in 2024/25. Its only remaining project in the pipeline is its $900-million Salares Norte project in Chile, which remains on course despite the distraction posed by a colony of endangered chinchillas that the company has been trying to relocate.  

Griffith is no stranger to deal-making, having charted a mechanisation path when he was at the helm of Anglo American Platinum, which included the sale of its labour-intensive operations to Sibanye-Stillwater. But this would be his first bagged big game as a CEO.  

If the transaction fails to get sealed, Yamana and Gold Fields could both be takeover targets. The global gold sector still has room for consolidation. DM/BM