Investing

Pan American Silver, Agnico Eagle Close $4.8 Billion Deal for Yamana Gold

Paul Ausick

Published: April 3, 2023 10:57 am

Last Updated: April 3, 2023 10:58 am

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.

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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.

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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%.