The multibillion-rand penalty fee received by Gold Fields from the failed Yamana tie-up last year gave the gold producer a soft landing in the face of $502m impairments it incurred in the 2022 financial year.
The company said on Wednesday it expects a 7%-13% drop in basic earnings per share when it reports its full-year results due to impairments at Tarkwa and Cerro Corona.
It said the impairments were largely due to an increase in discount rates, a writedown of the investment in the Far Southeast and inflationary cost pressures.
“This was partially offset by the net proceeds from the Yamana break fee,” the company said.
The gold producer said it had received a net amount of $202m from Yamana Gold after merger talks collapsed due to a rival bid.
Yamana Gold, which owns and operates gold, silver and copper mines in Canada, Chile, Brazil and Argentina, last year opted to accept a rival bid for its assets, despite having had an agreement in place with Gold Fields.
Gold Fields, led by Chris Griffith, had offered 0.6% of its shares for each Yamana share, implying a valuation of about R103.8bn. The deal, if concluded, would have seen Gold Fields’ shareholders own 61% of the combined group and Yamana shareholders the rest.
However, a rival joint bid by Agnico Eagle and Pan American Silver amounted to $1bn in cash and about 153.5-million shares in Pan American, which is listed on Nasdaq. It further offered 36.1-million shares in Agnico Eagle, which is listed on New York Stock Exchange.
Gold Fields scored a hefty penalty fee from Yamana due to it reneging on the deal. However, the failed merger cost Griffith his job.
Gold Fields said in a trading update it has met its production goals and expects gold production to exceed 2022 guidance and increase 3% from the previous year to 2.4-million ounces. It also expects mining costs to be up about 2%, which is within the guidance range.
The group previously said that under the leadership of interim CEO Martin Preece it will continue to focus on ramping up production at its SA-based South Deep mine and on delivering the first gold from its new Salares Norte mine in Chile by the end of the second quarter of 2023.
For the year to date the group’s share price is down 2% to R181.
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