Yamana Gold Set for London Listing
Reprinted from the FT – 20/07/2020
Canadian producer wants to tap a larger pool of capital as precious metal surges in pandemic Gold have risen to a nine-year high, driven by concern over coronavirus and the outlook for global trade.
One of Canada’s biggest gold producers has announced plans to list in the UK as it seeks to tap a new pool of capital. Yamana Gold, which has a market value of $5.3bn, said on Monday it had applied for a standard listing and expected its shares to start trading on the London Stock Exchange in the next couple of months. Peter Marrone, Yamana’s founder and executive chairman, said there was a “void” in London for a “pure-play” gold company producing 1m ounces a year in “friendly mining jurisdictions”.
“Our due diligence tells us that there are billions of dollars of capital available in London that we should be exploiting,” he told the Financial Times. “This is an ideal time to be joining.” London lost its biggest and most successful gold company last year when Randgold Resources delisted after being acquired by Barrick Gold.
Most producers of the yellow metal listed in the UK either lack the scale to appeal to mainstream investors — who also expect to receive dividends — or operate in countries that have a high degree of political risk. Mr. Marrone said Yamana’s focus on the Americas, where it has five operating mines, and record of paying almost $1bn in dividends since 2007, would appeal to investors seeking exposure to the rising gold price.
Gold has risen almost 20 per cent this year to a nine-year high of more than $1,800 an ounce, boosted by nerves over the spread of Covid-19 and the outlook for global trade — as well as rock-bottom yields on other safe assets. Gold equities have done even better, rising 33 per cent this year as measured by the NYSE Arca Gold Miners index. Yamana, which is already listed in Toronto and New York, is up 41 per cent, just behind its larger rival Barrick Gold, which has risen 47 per cent.
As Yamana is already domiciled in Canada and is seeking only a standard rather than a premium listing it will not be eligible for inclusion in the prestigious indices run by FTSE. However, listing on the LSE will put it on the radar of investors who are not allowed to own quoted companies outside the UK.
Yamana is not planning to raise any capital in conjunction with the listing. “Yamana will offer UK investors a chance to buy a top-class gold miner with mines in the Americas which are perceived as [having] low jurisdictional risk,” said Matt Hasson of Hannam & Partners, a London-based investment bank. “The company has substantially increased its dividend in the last year and has low-cost growth potential at its existing projects.”
In 2019, Yamana generated a net income of $225.6m on revenue of $1.6bn at an average gold price of $1,392 an ounce. Its biggest mines are Canadian Malartic in Quebec and El Peñón in Chile. Asked about the outlook for gold Mr. Marrone said it was difficult to think of a better backdrop, citing the huge fiscal and monetary response to the coronavirus crisis and the giant mound of negative-yielding debt. That has undermined one reason not to buy gold: that it provides no income. “If you could devise a perfect storm for gold this would be it,” said Mr. Marrone. “Directionally, it is going higher.”