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GFI.US's $1.57 billion acquisition of Osisko Mining accelerates its expansion in the precious metals market.

AInvestMonday, Aug 12, 2024 7:40 am ET
1min read

In the backdrop of soaring global gold prices, Gold Fields Inc. (GFI.US) announced Monday that it had agreed to buy Canadian Osisko Mining Inc. for C$2.16bn (US$15.7bn), the latest move by a mining giant seeking to expand.

The Johannesburg-listed company will buy all Osisko’s outstanding shares for C$4.90 each in cash, a 66.7% premium to Osisko’s Friday closing price, according to a statement released by Gold Fields on Monday.

The acquisition marks Gold Fields’ full control of Windfall, a gold mine in Canada, the latest move by the South African mining giant to diversify. Two years ago, Gold Fields tried to buy Yamana Gold Inc but failed.

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Osisko’s board unanimously recommended that shareholders vote in favour of the deal, which would give Gold Fields full ownership of Windfall, a joint venture with Osisko.

Gold Fields has shifted its focus from South Africa, where mining companies are facing challenges from mining gold from the world’s deepest mines. Its gold production fell by 18 per cent in the first quarter of this year, due to weather-related incidents and operational challenges at its mines.

The deal comes as gold prices are near historic highs, a market trend that has encouraged mining companies to strike more deals.

Gold Fields was founded in 1887 by Cecil John Rhodes, and has shifted its focus to lucrative mines in Ghana, Australia and the Americas as it faces geological challenges mining gold from the world’s deepest mines.

Gold Fields said Osisko’s projects in Quebec would help it “consolidate a premier mining jurisdiction in Canada’s largest gold mine and move into the top 10 global gold mines.”

Gold Fields plans to fund the deal with its own cash, undrawn bank loans and additional financing from a group of lenders. It had previously proposed a C$6.7bn deal for another Canadian producer, Yamana Gold, but its 2022 plan was defeated by a rival.

As of Monday’s opening, Gold Fields was up nearly 2 per cent at $15.8.

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