SOUTH Africa's Gold Fields is set to become one of the four biggest gold miners in the world after agreeing to acquire Canada-based Yamana Gold in a $6.7bn (£5.3bn) all-share deal, the biggest in the region in years.

Shares in the South Africa-listed mining company fell 20 per cent, however, and investors voiced concern about dilution on a call with Gold Fields CEO Chris Griffith and Yamana CEO Peter Marrone. Yamana shares rose as much as 8.6 per cent on the deal, and were last up 4.2 per cent.

Credit Suisse analysts said the premium Gold Fields agreed to pay for Yamana - 31 per cent above Yamana's latest close - was "considerably higher" than in other recent gold deals.

"We are asking you to invest in this future value at what we think is a very, very attractive premium," Griffith told investors. "We don't expect the market instantaneously to have the same level of appreciation for this deal as we do."

The acquisition is the largest mining deal in the Europe, Middle East and Africa (EMEA) region in a decade, and the third-largest South African transaction since 2014 — all in a sector that analysts say needs consolidation to reduce costs.

The deal gives Gold Fields a coveted foothold in the Americas, Griffith told Reuters in an interview. Gold Fields will be propelled to fourth place in terms of gold production, behind Newmont, Barrick and Agnico Eagle.

The transaction will see Gold Fields shareholders owning about 61 per cent of the combined group, while Yamana shareholders will own around 39 per cent after the deal completes.

Marrone said Gold Fields was the best custodian for Yamana's assets.

Yamana, which produced 884,793 ounces of gold and 9.2m ounces of silver in 2021, owns 50 per cent of Canada's biggest gold mine, Canadian Malartic, and has operations in Chile, Brazil and Argentina. Gold Fields has long eyed Canada, Griffith said, as it looked for assets that would complement its growth strategy and provide synergies.

"That's what the Yamana assets do, they tick all those boxes for us. They bring high quality assets in Canada, Chile and Brazil," Griffith said.

Reuters

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