Gold Fields Ltd. has entered into a definitive agreement to purchase all of the outstanding common shares of Yamana Gold, creating a top-four global gold major. All of the outstanding Yamana shares will be exchanged at a ratio of 0.6 of an ordinary share in Gold Fields or 0.6 of a Gold Fields American depositary share for each Yamana share. The transaction implies a valuation for Yamana of $6.7 billion and represents a premium of 33.8% to the 10-day volume-weighted average price of Yamana’s shares of $5.20 on May 27.

Upon closing of the transaction, Gold Fields shareholders and Yamana shareholders will own approximately 61% and 39% of the combined group, respectively.

The companies said the acquisition of Yamana by Gold Fields significantly strengthens the ability of the combined company to deliver on Gold Fields’ three strategic pillars: maximizing asset potential; advancing ESG commitment; and growing the value and quality of its asset portfolio.

“Today we are announcing the acquisition by Gold Fields of Yamana, two companies with complementary portfolios, cultures and strategic priorities,” Gold Fields CEO Chris Griffith said. “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.”

Gold Fields’ Board said 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.

Yamana has a high-quality, diversified portfolio of long life assets located in mining friendly rules-based jurisdictions across the Americas (including its five producing mines — El Penon, Jacobina, Canadian Malartic, Minera Florida and Cerro Moro — 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 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. Gold Fields will remain headquartered in Johannesburg.

“This is an outstanding opportunity for our shareholders, employees and the local communities in which we operate throughout the Americas,” Yamana Gold Executive Chairman Peter Marrone said. “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.”

After months of discussion and due diligence beginning late last year, Marrone said the company determined that Gold Fields was a high-quality standalone company.

“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,” Marrone said. “The combined entity will be well positioned to deliver long-term value creation with its enhanced scale, management strength and improved capital markets profile.

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.

The combined group will continue to commit to Gold Fields’ 2030 decarbonization, environmental, safety and health, diversity and stakeholder value creation targets; and initial target pre-tax synergies of approximately $40 million per year anchored in operational integration, as well as potential financing synergies and a streamlining of overhead cost structures.

The combined group will include highest rank by reserve life index relative to senior gold peers, third largest by gold production in 2024, and fourth largest by market capitalization.