Gold Fields vows not to sweeten Yamana bid

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South African giant Gold Fields Ltd. [GFI-NYSE, GFI] says it will not sweeten its existing takeover bid for Yamana Gold Inc. [YRI-TSX, AUY-NYSE] after considering a rival offer from Pan American Silver Corp. [PAAS-TSX, NASDAQ] and Agnico-Eagle Mines Ltd. (AEM-TSX, AEM-NYSE).

Based on the information included in the joint press release issued by Pan American and Agnico on November 4, 2022, and the press release issued by Yamana on the same day, Gold Fields said it stands behind the existing terms of its offer.

“Having considered this information in consultation with its financial and legal advisors, the board continues to believe that the Gold Fields transaction, as jointly announced by Gold Fields and Yamana on May 31, 2022, remains strategically and financially superior to the joint offer,” Gold Fields said.

Gold Fields’s share exchange bid, worth US$6.7 billion when it was announced, would make the combined company the globe’s third largest gold producer and fourth largest by market capitalization.

Gold fields was reacting to a rival bid that would see Pan American acquiring all the issued and outstanding shares of Yamana, which would then sell certain subsidiaries and partnerships holding Yamana’s interests in its Canadian assets to Agnico. That would include a 50% interest in the Canadian Malartic mine, which ranks as Canada’s largest gold mine and Yamana’s biggest producer.

The mine is currently held jointly by Agnico-Eagle and Yamana.

The Pan American-Agnico bid, worth US$4.8 billion includes, US$1.0 billion in cash.

Yamana is a Canadian precious metals producer with significant gold and silver production, development stage properties and exploration properties in the Americas, including Brazil, Argentina, Chile, Mexico and Canada.

Pan American and Agnico Eagle said they have been informed that Yamana’s board of directors considers their offer to be a “Yamana Superior Proposal’’ as defined by the arrangement agreement dated May 31, 2022 between Yamana and Gold Fields, subject only to Gold Fields “right to match” under the Gold Fields agreement.

Gold Fields now has until Friday to raise its offer. If it elects not to, and Yamana’s board decides to accept the rival offer, it will need to pay Gold Fields a US$300 million break fee.

If it proceeds, the Pan American-Agnico arrangement would establish Pan American as a major precious metals producer in Latin America, with approximately 28.5 to 30 million ounces of annual silver production and approximately 1.1 to 1.2 million ounces of annual gold production, based on Pan American’s and Yamana’s 2022 guidance.

The combined portfolio would consist of 12 operations concentrated in Latin America. The deal would also give Agnico-Eagle operational control of the Canadian Malartic mine during the remaining development of the Odyssey project at Canadian Malartic and future projects nearby

On November 3, 2022, Yamana shares closed at $6.58 after 2.66 million shares had changed hands. The shares are currently trading in 52-week range of range of $4.78 and $8.05.

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