After U.S. markets opened last Friday, Canada-based Pan American Silver Corp. (NASDAQ: PAAS) announced that it had completed its $4.8 billion acquisition of Yamana Gold (AUY). The cash-and-stock deal includes a side agreement with Agnico Eagle Mines Ltd. (NYSE: AEM) in which Pan American sold its 50% interest in Canada’s Malartic mine to Agnico Eagle. The Malartic is Canada’s largest gold mine, producing about 740,000 ounces of gold last year.
The Pan American acquisition is the largest in the gold mining industry in nearly a year, reinforcing the commodities adage that when the going gets tough, the tough consolidate. Pan American beat out an offer from South Africa’s Gold Fields Ltd. (NYSE: GFI) after Gold Fields’ May 2022 all-stock offer for around $6.7 billion dropped to around $4.0 billion as the company’s stock cratered. Gold Fields withdrew from the bidding in November, and its share price has increased by about 38% since then. Pan American’s stock is up by around 22% since winning the bid, and Yamana’s shares rose nearly 17% after Gold Fields withdrew. Gold prices have increased by about 15% since early November.
Before the sale of its interests in the Malartic mine to Agnico Eagle, Yamana was Canada’s fifth-largest gold miner, with a market cap of around $6.9 billion. Agnico Eagle was the third largest, with a market cap of about $28.4 billion. Pan American, which acquired Agnico Eagle’s Latin American assets as part of the deal, had a market cap on Friday of around $5.4 billion.
Agnico Eagle CEO Ammar Al-Joundi said in January that the company “wanted the other half of Malartic forever, but it never came for sale.” In February 2022, Agnico Eagle paid $9.6 billion for Kirkland Lake Gold. Pan American gets silver and gold properties in Latin America, but Malartic was the key to the deal.
Yamana stock no longer trades in New York or London, and it will cease trading in Toronto after markets close Monday. Agnico Eagle shares traded up about 1.5% in New York on Monday morning, while Pan American shares traded down about 0.3%.
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