Gold Fields is buying out Canadian-listed Osisko Mining Inc’s 50% interest in the Windfall project that the two companies jointly control for $1.57 billion (R28.6bn).
The JSE and New York dually-listed gold miner said on Thursday that it expects headline earnings per share for the interim period to June, 2024 to be lower by at least 25% compared to the previous contrasting period on the back of lower gold production. However, the company expects to bump up its output in the second half-year period.
Now, Gold Fields has set its sights on acquiring the remaining 50% it does not already own in the Windfall project through the acquisition of all of the issued and outstanding common shares in Osisko.
Gold Fields and Osisko entered into the Windfall project joint venture in May, last year.
“Under the terms of the transaction, Gold Fields has agreed to acquire the Osisko Shares at a price of C$4.90 per share in cash. The offer price represents transaction consideration of approximately $1.57bn on a fully diluted basis and enterprise value of $1.08bn,” said Gold Fields yesterday.
With the offer price representing a 55% to the 20-day volume weighted average price for Osisko’s shares on the TSX, shares in Gold Fields slumped 2.61% to R283.25 in the JSE’s afternoon trade yesterday. This was in extension of its 8.89% and 7.85% losses in the past seven days and 90 days, respectively.
After completion of the transaction, Gold Fields will attain full control of the Windfall asset which it has described as highly strategic.
Gold Fields said the acquisition of Osisko will “extinguish Gold Fields’s existing obligations of a C$300 million deferred cash payment and C$75 million exploration obligation, which were part of the 2023 joint venture transaction”, with its Canadian joint venture partner.
“Over the past two years, beginning with our initial due diligence in 2022 and throughout our joint ownership of the project since May, 2023 we have developed a strong understanding of Windfall and its potential, and view it as the next long-life cornerstone asset in our portfolio,” said Gold Fields CEO, Mike Fraser.
“The acquisition is consistent with our strategy to improve the quality of our portfolio through investment in high-quality, long-life assets like Windfall,”
Fraser added that the latest transaction provided Gold Fields with the opportunity to consolidate its presence in Québec, a Tier-1 mining jurisdiction where it is geared to apply its experience and expertise in greenfields exploration, project development and underground mining.
The company had net debt to earnings before interest, taxes, depreciation, and amortisation of 0.51 as at end-March this year, in addition to $424 million in cash and approximately $1.8bn in undrawn debt facilities.
In May, Gold Fields repaid bonds totalling $500 million while its wholly-owned subsidiaries have recently entered into a commitment letter with a group of lenders for the commitment of a bank liquidity facility of $500m. This will be used to fund a portion of the acquisition of Osisko.
Full ownership of Windfall will enable Gold Fields “to streamline decision-making and increase flexibility with respect to the project’s development”, and subsequent operation.
Gold Fields believes that Windfall is on track to become its next high-quality, low-cost underground gold mine, with considerable growth prospects. The transaction is however subject to Osisko shareholder and Canadian competition approvals.