Gold Fields Ltd. agreed to buy Canada’s Osisko Mining Inc. in a deal valued at C$2.16 billion ($1.6 billion), becoming the latest producer to seek to expand amid soaring prices for the precious metal.
The acquisition, which gives Gold Fields full control of a gold project in Canada, is the latest step by the South African miner to diversify away from the country where it made its name. That included a failed bid for Yamana Gold Inc. two years ago.
The Johannesburg-listed company will use cash to acquire all outstanding shares in the Canadian miner at a price of C$4.90 each, Gold Fields said in a statement Monday. That represents a 66.7% premium to Osisko’s closing price on Friday.
The deal hands Gold Fields full ownership of Canada’s Windfall gold project, currently a 50:50 joint-venture with Osisko. The company, which disposed of all but one of its South African assets a decade ago, is developing the Windfall mine to add to operations that span Peru to Australia.
“The acquisition is consistent with our strategy to improve the quality of our portfolio through investment in high-quality, long-life assets, like Windfall,” Gold Fields Chief Executive Officer Mike Fraser said in the statement.
Osisko’s board has unanimously recommended that shareholders vote in favor of the deal.
Gold Fields has diversified away from its base in South Africa, where producers are struggling with the challenges of extracting gold from the world’s deepest mines. In the first quarter of this year, the company’s gold production fell 18% due to weather-related events and operational challenges across its portfolio of mines.
The Osisko deal comes with gold prices near a record high that has spurred producers to do more deals.
