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Monday, October 3, 2022

Diggers and Dealers Special: SOUTH AFRICAN MAJOR GOLD FIELDS TAKES CANADIAN TAKEOVER ROUTE TO GLOBAL NO.4 STATUS.

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I Diggers and Dealers Special I

“The $US6.7B all-shares agreement announced in May to acquire Canadian international miner Yamana Gold is the big next step in Gold Fields’ strategy of quality growth. After exploring the options of organic growth and bolt-on acquisitions, the company concluded the corporate acquisition offered the greatest benefits in speed of delivery and value to deliver the next phase of growth.”

Goldfields

It’s instructive that the company on the verge of becoming the world’s fourth-largest gold miner found it necessary to effectively introduce itself to the audience at Australia’s premier resources sector conference, the Diggers & Dealers Mining Forum in Kalgoorlie. Behind its eponymous name, and although it is not listed on the ASX, Johannesburg-based Gold Fields holds a significant position in the Australian mining sector.

CEO Chris Griffiths pointed out that Australia is the cornerstone of the company’s global operations, with its interests in the St Ives, Granny Smith, Agnew and Gruyere mines in WA delivering a million ounces of gold annually that represents 42% of its annual world-wide production and 51% of its cash-flow.

That makes Gold Fields the fourth-largest gold producer in Australia, and it delivered its FY2021 production of 1.019Moz at $US1,146/oz – the country’s lowest. It also spends $A80-100M on grassroots exploration. The $US6.7B all-shares agreement announced in May to acquire Canadian international miner Yamana Gold is the big next step in Gold Fields’ strategy of quality growth. After exploring the options of organic growth and bolt-on acquisitions, the company concluded the corporate acquisition offered the greatest benefits in speed of delivery and value to deliver the next phase of growth.

Griffiths described the Yamana transaction as a pre-emptive move by the company. With current production of 2.34Moz from its nine mines in five countries in South America and Africa as well as Australia, he said the company recognised it lacked capacity in its portfolio to replace and grow production further once it reached 2.8Moz.

“We think pre-emptively and pro-actively, we are investing in the next generation of Gold Fields from a position of strength.”

Yamana’s high-quality asset base in the Americas and strong development and exploration pipeline would diversify the geography of its portfolio, positioning it to deliver long-term value creation. Gold Fields has indicated it will seek a Toronto Stock Exchange listing if the takeover is approved, with Yamana shareholders due to vote in October. It has indicated no plans for an ASX listing.

 

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