It’s back to the drawing board for Gold Fields to size up assets for acquisitions for future growth after its failed bid for Yamana Gold.
This follows Gold Fields’ announcement on Tuesday that it had terminated the agreement to acquire Yamana Gold, and expected to be paid a $300 million (R5.3 billion) break fee within two business days, under the terms of the arrangement agreement.
Yesterday, its shares leapt to close on the JSE a whopping 21.06% stronger to R184.50 as shareholders in the mining firm, who were worried that the acquisition would dilute their shareholding, celebrated the collapsed deal.
In a press call with journalists yesterday, Gold Fields CEO Chris Griffith said its board was confident about its decision not to make an increased offer for Yamana.
“We were prepared in a disciplined way to walk away and let someone else take over. We will certainly look at other offers in the future. This was certainly not a waste of time both in terms of strategy and landing the $300 million,” he said.
Griffith said he felt vindicated as some had said the deal was flawed.
"The fact that other companies came and made a superior offer on Yamana confirmed that this was a good set of assets as other folks want to own some of those assets and be prepared to pay more, to me that sounds like a vindication of the work that we had done,“ he said.
Gold Fields had a strategy of improving the quality of its portfolio in place and that strategy was long-term.
“What Yamana would have done was help improve the package of assets that we have in a complimentary way. We might have to do that differently now, and that is okay. It is part of our strategy.
“Some things have been on our radar and we don’t know exactly where the right opportunity might come along. It is too early to say because this deal (Yamana) will take a little bit of time to wrap up because of the work we had put into that deal,” he said.
In an interview with Business Report yesterday, Gold Fields said its business was strong – with or without Yamana.
Looking ahead, the group said its strategy would remain unchanged.
“We will continue to grow the value and quality of our portfolio of assets. Gold Fields will continue to grow its production profile over the next three years with Salares Norte in Chile coming on stream in mid-2023 and the continued ramp-up of South Deep,” it said.
Deal Leaders International CEO Andrew Bahlmann said despite initial shareholder opposition, it eventually appeared in more recent times that shareholders might acquiesce and accept the Yamana Gold deal.
“It made sense from a number of perspectives – Gold Fields’ need to address its declining production and its stated strategy of expanding in the Americas, particularly South America, as these tend to be less expensive,” he said.
Bahlmann said it might be that shareholders came to view the Yamana deal and had the view that compared with rejecting the deal as the lesser of two evils – the greater evil being seeing production dwindle.
“Given that scenario, and that expectations have now built up momentum, I would assume that Gold Fields CEO Chris Griffith will go back to the drawing board and look for another deal,” he said.
Bahlmann said even before the Yamana deal, Griffith had stated the company was evaluating a number of opportunities that they thought would fit its portfolio in those geographic areas – so it’s likely they already had alternative options.
“Adding more assets in countries like Chile and Peru would potentially lower costs. If it fails to acquire new assets with commercially viable deposits, Gold Fields may be forced to process tailings at its Cerro Corona mine in Peru to maintain production quotas,” he said.
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