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Gold Fields looks to take over Yamana Gold in major M&A deal

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Gold Fields and Yamana Gold have entered into a definitive agreement, under which Gold Fields will acquire all the outstanding common shares of Yamana pursuant to a plan of arrangement in a deal that could create a top three gold producer (by production).

Under the terms of the transaction, all outstanding Yamana shares will be exchanged at a ratio of 0.6 of an ordinary share in Gold Fields or 0.6 of a Gold Fields American depositary share for each Yamana share. The transaction, which has been unanimously approved by the Board of Directors of both Gold Fields and Yamana, implies a valuation for Yamana of $6.7 billion and represents a premium of 33.8% to the 10-day Volume-Weighted Average Price of Yamana’s shares on May 27.

Upon closing of the transaction, it is anticipated Gold Fields shareholders and Yamana shareholders will own approximately 61% and 39% of the combined group, respectively.

Based on 2021 production, the combined group would have a 3.4 Moz profile along with a 25-year reserve life. It would also benefit from the near-term growth of Gold Fields’ Salares Norte (Chile) and South Deep (South Africa) mines, and longer-term growth from Yamana’s Wasamac (Canada), Malartic Odyssey (Canada) and MARA (Argentina) projects as well as additional opportunities in Yamana’s high-quality exploration pipeline, the companies said.

Gold Fields and Yamana currently have 14 mines providing regional relevance across premier, rules-based mining jurisdictions including North America, South America, Africa and Australia, they said.

The deal would create the third largest gold company by gold production in 2024, and fourth largest by market capitalisation, according to the companies, but there is also a clear near-term path towards some 4 Moz of gold-equivalent steady-state annual production, Gold Fields said.

Wasamac, in feasibility study stage, is included within this, but beyond that, the company also outlined growth potential from Jacobina, El Peñón, Minera Florida and Lavra Velha, plus longer-term upside that included the development of MARA.

MARA, owned 56.25% by Yamana, is a joint venture with Newmont and Glencore. It is a brownfield operation leveraging existing Minera Alumbrera infrastructure that has 38.9 Moz of reserves.

A feasibility study on the project is expected to be completed by year end, with the report published in the March quarter of 2023.

Chris Griffith, Chief Executive Officer of Gold Fields, said about the combination: “Today we are announcing the acquisition by Gold Fields of Yamana, two companies with complementary portfolios, cultures and strategic priorities.

“The result is a combination with much greater capacity and potential value than the sum of its parts. Each company brings with it a unique set of skills and geological knowledge, enabling the combined group to enhance its assets more efficiently over the long-term than they could as separate companies.

“Like Gold Fields, Yamana is focused on operational delivery, disciplined capital allocation, portfolio management, maximising shareholder returns, and upholding leading sustainability, safety and ESG performance. These shared priorities are foundational to this transaction.”

Peter Marrone, Executive Chairman of Yamana Gold, added: “This is an outstanding opportunity for our shareholders, employees and the local communities in which we operate throughout the Americas. The transaction delivers an immediate and compelling premium for Yamana Shareholders, reflecting the inherent fair value of our assets, while also offering an opportunity to benefit from the creation of a new global gold producer with an attractive value proposition.

“The combination of Yamana and Gold Fields creates a world-class, globally diversified company with regional relevance across premier, rules-based mining jurisdictions that is underpinned by low cost, long life mines.”

The initial target for pre-tax synergies is approximately $40 million/y, anchored in operational integration, as well as potential financing synergies and a streamlining of overhead cost structures, they said.

The deal, which is subject to several approvals, is expected to close in the December quarter.

Yamana Gold retains electrification path for Wasamac in new study

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Yamana Gold has reiterated a plan to minimise the amount of carbon emissions generated with the development and operation of the Wasamac gold project in Quebec, Canada, in its first study since acquiring the asset from Monarch Gold.

Monarch, prior to being taken over by Yamana Gold, had laid out plans for an underground mine at Wasamac producing 6,000 t/d, on average, with an expected mine life of 11 years. It expected to use a Rail-Veyor® electrically powered, remote-controlled underground haulage system in addition to an almost entirely electric fleet of production and development equipment.

The December 2018 feasibility study by BBA indicated the Wasamac deposit hosted a measured and indicated mineral resource of 29.86 Mt at an average grade of 2.7 g/t Au, for a total of 2.6 Moz of gold, and proven and probable mineral reserves of 21.46 Mt at an average grade of 2.56 g/t Au, for a total of 1.8 Moz of gold. The study forecast average annual production of 142,000 oz of gold for 11 years at a cash cost of $550/oz.

With drilling, due diligence and further studies, Yamana Gold, in studies forming the new feasibility level studies, has come up with baseline technical and financial aspects of the Wasamac project that, it says, underpin the decision to advance the project to production.

This has resulted in a few changes to the Wasamac plan.

For starters, the company plans to use the extract the now 1.91 Moz of reserves quicker than Monarch’s strategy, with a rapid production ramp-up in the first year followed by sustained gold production of approximately 200,000 oz/y for at least the next four years.

Including the ramp-up phase, average annual production for the first five years of operation is expected to be 184,000 oz, the company said, with life of mine production of 169,000 oz/y. Mill throughput has been increased to 7,000 t/d, on average, but the plant and associated infrastructure were being sized for 7,500 t/d. Production could start up in the December quarter of 2026, the initial capital expense was expected to be $416 million and all-in sustaining costs over the life of mine had been calculated at $828/oz.

The use of a conveyor is still within this plan, but a company spokesperson told IM that Yamana was now considering a conventional belt conveyor rather than the Rail-Veyor system.

Yamana explained: “The optimised materials handling system uses ore passes and haul trucks to transport ore from the production levels to a central underground primary crusher. The haul trucks will be automated to allow haulage to continue between shifts. From the underground crusher, ore will be transported to the crushed-ore stockpile on the surface using a 3-km-long conventional conveyor system in two segments.”

Yamana added: “Using a conveyor rather than diesel trucks to transport ore to surface reduces CO2 emissions by 2,233 t/y, equivalent to taking 500 cars off the road. Over the life of mine, the company expects to reduce CO2 emissions by more than 20,000 t.”

The aim to use electric vehicles wherever possible remains in place.

“The Wasamac underground mine is designed to create a safe working environment and reduce consumption of non-renewable energy through the use of electric and high-efficiency equipment,” the company said. “Yamana has selected electric and battery-electric mobile equipment provided that the equipment is available at the required specifications.

“Battery-electric underground haul trucks are not yet available at the required capacity with autonomous operation, so diesel trucks have been selected in combination with the underground conveyor. However, Yamana continues to collaborate with equipment suppliers with the expectation that the desired battery-electric equipment will be available before Wasamac is in operation.”

In tandem with this, the company plans to use a ventilation on demand solution and high-efficiency fans to reduce its power requirements. This will likely rely on an underground LTE network.

“Heating of the underground mine and surface facilities is designed with the assumption of propane burners, but an opportunity exists to extend the natural gas line to the project site,” it added. “Yamana has initiated discussions with the natural gas supplier and will study this opportunity further as the project advances.”

The site for the processing plant and offices is confined to a small footprint strategically located in a naturally concealed area, and the processing plant has been designed with a low profile to minimise the visual impact as well as minimise noise and dust, according to Yamana.

The primary crusher, previously planned to be located on surface, has been moved underground, with the crushed material transported to surface from the underground mining area using conventional conveyors and stored on surface in a covered stockpile to control dust.

Several design improvements to the previous Wasamac plans have also been made to reduce consumption of fresh water to minimise the effect on watersheds, according to Yamana. Underground mine water will be used in the processing plant, minimising the draw of fresh water and reducing the required size of the mill basin pond.

The Wasamac tailings storage strategy is designed to minimise environmental footprint and mitigate risk, it added.

“Around 39% of tailings will be deposited underground as paste fill and 61% of tailings will be pumped as a slurry to the filter plant located approximately 6 km northwest of the processing plant and then hauled to the nearby dry-stack tailings storage facility,” Yamana said.

Strategic phasing of the tailings storage facility design allows for the same footprint as previously planned, even with the increase in mineral reserves, the company clarified. Also, the progressive reclamation plan for this facility minimises the possibility of dust generation and expedites the return of the landscape to its natural state.

Yamana Gold evaluates Jacobina backfill plant, underground mine at Canadian Malartic

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Yamana Gold says it is evaluating the installation of a backfill plant at its Jacobina gold mine in Brazil (pictured) in a move that would reduce the asset’s environmental footprint, as well as extend the life of the operation’s existing tailings storage facility.

The backfill plant would allow up to 2,000 t/d of tailings to be deposited in underground voids, Yamana said in its 2021-2023 guidance and 10-year overview release.

The miner said the construction and operation of a backfill plant would also improve mining recoveries at the operation, resulting in increased conversion of mineral resources to mineral reserves.

Jacobina produced 44,165 oz of gold during the December quarter and an all-time high of 177,830 oz for 2020, the company reported in a separate release.

This was the seventh consecutive year of increasing production at the operation, a trend that is expected to continue in the coming years, Yamana said.

“Successful infill and exploration drilling in the Canavieiras and João Belo sectors during 2020 continues to generate significant growth potential,” the company added.

Production in 2021 is forecast to be in a similar range to the 177,830 oz recorded in 2020, Yamana said.

“The operation exceeded the targeted throughput rate of 6,500 t/d for the Phase 1 expansion, and it continues to identify and implement additional processing plant optimisations to further increase throughput, improve recoveries and reduce costs,” the company said. “Beyond further optimisations, the feasibility study for Jacobina’s Phase 2 expansion plans to increase throughput to 8,500 t/d and raise annual production to 230,000 oz remains on track for mid-2021.”

Yamana’s base case in its 10-year overview also included production from an underground mine at the Canadian Malartic operation in Quebec, Canada. This consists of the East Gouldie, Odyssey, and East Malartic zones, (collectively known as the Odyssey project).

Owned 50:50 by Yamana and Agnico Eagle, the Canadian Malartic open-pit mine exceeded its revised 2020 guidance, producing 568,000 oz of gold (on a 100% basis). Production last year was impacted by COVID-19 related restrictions on mining in Quebec and is forecast to increase in 2021 to 700,000 oz, with all-in sustaining costs projected to decline to $850-$885/oz, from $945/oz in 2020.

The Canadian Malartic open pit will be depleted in the first half of 2023, and waste rock and tailings will be deposited into the pit beginning in 2023, Yamana says.

This coincides with planned first production from the Odyssey South zone at the underground project, with the Upper East Gouldie zone expected to come online in 2027.

The most recent underground mineral resource for the project, which was published in February 2020, showed more than 10 Moz of gold (100% basis), including 9.6 Moz ounces of inferred mineral resources (100% basis) and 830,000 oz of indicated mineral resources (100% basis).

“In the interim, exploration results have been exceptional, improving economics and increasing confidence that the underground project will be a multi-hundred-thousand-ounce annual producer for decades,” Yamana said.

Key development milestones for the underground project over the next three years include the development of a ramp into the Odyssey, East Malartic, and East Gouldie zones, which will allow for tighter definition drilling to further expand the mineral resource base, along with headframe construction and shaft sinking, Yamana said.

A preliminary economic assessment for the project is expected to be completed in February.

Yamana lets GoldSpot loose on Cerro Moro exploration database

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Following recent successes at El Peñón, GoldSpot Discoveries Corp has been reengaged by Yamana Gold  to use machine learning to identify new drilling targets at the Cerro Moro gold and silver mine, in Argentina.

Yamana has commissioned GoldSpot’s team of geologists and data scientists to examine its entire database and look for previously unrecognised data trends to identify areas of potential mineralisation at depth and on a regional scale, it said. By engaging GoldSpot, Yamana seeks to minimise exploration risk and mitigate exploration and drilling costs, the company added.

“GoldSpot will use its geoscience and machine science expertise to clean, unify and analyse exploration data from Yamana’s Cerro Moro mine and produce 2D and 3D targets for the exploration program,” GoldSpot said. “GoldSpot will also deliver new geophysical, geochemical and geological products produced through the reprocessing of the satellite images and other relevant layers which will help interpretations and mineralisation models.”

Denis Laviolette, Executive Chairman and President of GoldSpot, said the new contract with Yamana validates its work, thus far. “Yamana has been an incredible supporter of GoldSpot and we are proud to be a part of their digital transformation,” he said.

GoldSpot was previously commended for its use of machine learning technology to improve exploration targeting and also contribute to the meaningful increases in mineral resource inventory at Yamana’s El Peñón mine.

Henry Marsden, Senior Vice President, Exploration, at Yamana, said in February: “The collaborative AI process undertaken with GoldSpot has allowed Yamana’s exploration team to leverage many years of multidisciplinary exploration data and is playing a significant role in the current exploration targeting process at El Peñón. We are pleased with the progress that our partnership with GoldSpot has yielded so far and look forward to continued success.”

Lundin Mining enlists Ausenco for plant expansion optimisation study at Chapada

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Less than a year after acquiring the Chapada copper-gold operation from Yamana Gold, Lundin Mining is eyeing up a plant expansion at the Brazil mine.

The company has enlisted Ausenco to carry out a feasibility study to evaluate the optimisation of the current copper-gold processing plant from 24 Mt/y to 26 Mt/y, Ausenco confirmed.

In addition, Ausenco is to undertake trade-off studies to determine optimum plant expansion scenarios for a future expansion.

Prior to Lundin Mining acquiring the mine in July 2019, previous owner Yamana had been studying plant expansion opportunities to increase the processing rate to a range from 28 Mt/y to 32 Mt/y, Lundin Mining says. The relocation of some plant infrastructure to allow the push-back of the pit wall for the development of the Sucupira orebody was also being studied.

The processing facility at Chapada comprises a single-line plant designed to treat sulphide ores at a current capacity of around 65,000 t/d, or 24 Mt/y, with the conventional crush, grind and flotation process producing a gold-rich copper concentrate.

Lundin Mining expects Chapada to produce 51,000-56,000 t of copper in concentrate in 2020, along with 85,000-90,000 oz of gold in concentrate.

Maestro Digital Mine makes connections in Latin America

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Maestro Digital Mine’s Latin America expansion is gaining traction, with the Sudbury-based company recently landing sales from major gold mines in Argentina.

Its flagship Industrial Internet of Things measurement and control instrumentation solutions, such as the Vigilante AQS™ and Zephyr AQS™ air quality monitoring stations, and the Plexus PowerNet™ last mile communication platform, are designed to provide the visibility and communication miners require to keep up productivity and improve safety while operating at increasing depths

Having successful launched these products in over 130 mines, in more than 20 countries around the world, Maestro started its strategic outreach and market research in Latin America last year.

Maestro’s says its distribution channels are vital to its success in this area and, as part of the Maestro sales team, provide valuable feedback, access and service to potential clients in Latin America.

This strategy saw it partner with associations that assist with market research and business-to-business meetings, such as the Mine Connect (formerly SAMSSA), and the Northern Ontario Export Program led by the Greater Sudbury Development Corporation (GSDC) and Mining Suppliers Trade Association (MSTA), as well as secure four new distributors/agents in the key mining hubs of Argentina, Chile, Peru and Mexico to support this growth.

This investment is already starting to pay off, with the company recently landing significant contracts across the region.

In Argentina, Yamana Gold’s Cerro Moro mine, in the Santa Cruz province, is installing the Plexus PowerNet solution. This delivers a high speed, low latency digital communication network that provides “PoE+ power” to Wireless Access Points, cameras and any other IP-based device, Maestro said. The system eliminates the need for costly outside fibre optic contractors and can be installed and maintained by any internal tradesperson, according to Maestro.

Cerro Moro, an open-pit and underground gold-silver operation, poured its first gold and silver doré back in May 2018 and, up until recent COVID-19-related restrictions hit mining operations, was expected to produce 117,000 oz of gold and 7.5 Moz of silver in 2020, according to the miner.

In that same province, Maestro has also installed the last mile communication solution at Newmont’s Cerro Negro mine. This operation includes five underground mines (Eureka, Mariana Central, Mariana Norte, San Marcos, Bajo Negro), one open-pit mine (Vein Zone) and one cyanide leach processing facility that yields gold recoveries of 96%, according to Newmont.

In Mexico, Maestro has installed Vigilante AQS – air quality monitoring stations in Peñoles mines. Peñoles, a subsidiary company owned by Grupo BAL, is the second largest Mexican mining company, the top Mexican producer of gold, zinc and lead and a world leader in silver production.

Coeur Mining has, meanwhile, installed and integrated the Vigilante AQS and MaestroLink software into its Mexican mines. This includes the Palmarejo silver-gold complex. The miner continues to expand Maestro’s digital solutions on each new level of its Mexico mines, Maestro said.

Maestro concluded: “With the support of our distribution partners, we are proud to be enabling worker safety and productivity in the mines of Latin America. It is through a collaborative model that Canadian suppliers can impact positive change in the global mining industry.”

Agua Rica-Alumbrera mine integration plan hits the right note in latest study

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A plan to incorporate infrastructure from Glencore, Newmont Goldcorp and Yamana Gold’s jointly owned Alumbrera copper-gold operation, in Argentina, into the Agua Rica copper-gold project looks like paying off after a prefeasibility study (PFS) on the project highlighted an increase in annual output over the mine’s first 10 years and lower operating costs.

The three companies, in March, signed a definitive integration plan, which contemplated the development and operation of the Agua Rica project using the infrastructure and facilities of Minera Alumbrera, which saw open-pit mining conclude in 2018. This pact, they said, would realise important synergies, lowering initial capital required, and reducing the environmental footprint. As part of the deal, Agua Rica would be jointly owned by the three parties, with Yamana owning 56.25%, Glencore holding 25% and Newmont Goldcorp holding the remaining 18.75%.

Yamana said: “The integration plan generates significant synergies and lowers execution risk by bringing together the extensive mineral resource of Agua Rica with the existing infrastructure of Alumbrera to create a unique, high quality, and low risk brownfield project that the parties believe will bring significant value to shareholders and local communities and stakeholders.

“This unique and innovative project will serve to position Catamarca as a focal point for development in northwestern Argentina.”

Based on mineral reserves updated as at June 30, 2019, the PFS estimates a mine life of 28 years with average annual production over the first 10 years of around 533 MIb (241,765 t) of copper equivalent, including 107,000 oz of gold and contributions of molybdenum and silver. Average cash costs over this period were estimated at $1.29/Ib, with all-in sustaining costs coming in at $1.52/Ib.

Yamana said the initial capital cost estimate of $2.4 billion realises “significant synergies from using the infrastructure and facilities of Alumbrera”, with the project expected to generate an after-tax NPV (8% discount rate) of $1.935 billion based on a copper price of $3.00/Ib.

Opportunities to further improve the economics will be evaluated in a value-seeking study, scheduled for this year, and the full feasibility study, expected by 2020, Yamana said.

The PFS assumes a throughput rate of 110,000 t/d with scenarios considering a higher throughput rate to be evaluated in the value-seeking study and subsequent full feasibility study.

“Preliminary evaluations have indicated the potential for significant upside to the project economics from increases to throughput with existing mineral reserves to 115,000 t/d, which would improve NPV to over $145 million and require only a marginal increase to initial capital,” the company said.

The PFS for the integrated project considers the Agua Rica deposit to be mined via a conventional high tonnage truck and shovel open-pit operation. Average life of mine material moved is expected to be approximately 108 Mt/y, with ore feed of 40 Mt/y and average life of mine strip ratio of 1.66.

Ore extracted from the mine will be transported from the open pit by truck to the primary crusher area and then transported via a conventional conveyor to the existing Alumbrera processing plant. To route the overland conveyor system, approximately 5.2 km of tunnel development will be required. The conveyor extends 35 km to the Alumbrera process plant, where it will feed the existing stacker conveyor via a new transfer station.

Relatively modest modifications to the circuit are needed to process the Agua Rica ore in order to produce copper and by-products concentrate, according to Yamana, which will then be transported to the port for commercialisation. An in-situ blending strategy has been defined to manage the concentrate quality over certain years of the mine life, which will allow the project to achieve the desired targets, the company explained.

The high quality and well-preserved existing infrastructure of Alumbrera is fully used in the planned integration, Yamana said. Tailings storage facility, power supply, water supply, ancillary buildings, and logistical installations, among other infrastructure, are all included. “This significantly reduces the environmental footprint of the project,” Yamana said.

Given the level of progress achieved in the PFS, the parties have begun the process to prepare the Environmental Impact Assessment for the integrated project, as well as continuing engagement with local stakeholders and local communities, Yamana said.

Yamana Gold turns 15

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Toronto- and New York-listed miner Yamana Gold is celebrating 15 years as a public entity today.

On this day in 2003, the company was taken public with an initial portfolio including the Chapada project in Brazil, which it subsequently developed and brought into production in 2007 (pictured).

Yamana has, over the years, grown through phases of strategic acquisitions to enhance and diversify its portfolio as well as pursuing organic opportunities within its portfolio.

“Throughout, the company has focused on the sustainability of its business and has sought to continuously improve its performance across all health and safety, environment and community metrics,” Yamana said.

Peter Marrone, Chairman and Chief Executive Officer, said: “In 2003, we had a vision to create a significant and dominant intermediate gold company that focused on high quality assets in more prominent and higher quality mining jurisdictions in North and South America mostly to deliver better value with lower risk.

“Over the past 15-year period, we have achieved these objectives plus much more, and we are proud that Yamana, in 2018, is a realisation of that initial vision.”

Operating from seven mines in Brazil, Argentina, Chile and Canada, the company has a production platform of gold, silver and copper. It expects to produce over 1.1 million ounces of gold equivalent and 120 million pounds of copper this year.