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An independent valuation pegged Yamana Gold's ( YRI.TO ) mineral assets at $6 billion to $8 billion, in line with South Africa's Gold Fields' ( GFIJ.J ) initial offer price for the Canadian miner, circulars. released late Friday showed.
Gold Fields announced an agreement to acquire Yamana in an all-stock transaction that valued the Canadian company at $6.7 billion on May 31.
Investor concerns that the deal was dilutive and overvalued Yamana sent shares of Gold Fields down 20% on the day of the announcement.
The spread between Gold Fields' offer value and Yamana's share price narrowed after the stock plunged.
A rating report prepared by CIBC World Markets Inc. on Aug. 30, valued Yamana's mineral assets, which include 50% of Canada's Malarctic Mines — one of the world's largest gold mines — at $6.825 billion to $8.025 billion, according to circulars.
CIBC, one of Canada's largest investment banks, said its report did not treat Yaman as a legal entity and excluded the firm's costs and interest on debt held at the corporate level.
Gold Fields and Yamana did not provide financial projections, but used financial reports for 2021 to show that if the deal had gone through on Jan. 1 last year, the combined entity would have reported $6 billion in revenue and $744 million in annual profit.
The boards of both firms said they unanimously backed the deal, which would see Gold Fields own 69% of the combined entity and Yamana's current shareholders own 31%.
"The combined company will be a top 4 global gold champion with a diversified portfolio of high-quality, long-lived assets with tangible near- and long-term growth opportunities," the directors said.
Gold Fields said Yamana gives it a much-coveted foothold in North America and brings new assets on board at a time when the industry is facing inventory depletion.
Yamana and Gold Fields shareholders will vote on the deal on November 21 and 22.
The transactions require the approval of 75% of Gold Fields shareholders, while Yamana needs 66.67% support.
