Australia’s Gold Road Resources (ASX: GOR) has rejected a A$3.3 billion (C$2.97 billion) takeover bid from South Africa’s Gold Fields (JSE, NYSE: GFI), calling the offer “highly opportunistic” and saying it undervalued the company.
The Johannesburg-based miner offered A$3.05 per share — a 21% premium to Gold Road’s average share price over the past month. The all-cash proposal on March 7 and made public on Monday would have given Gold Fields full control of the Gruyere joint venture mine in Western Australia. The company said it will continue to engage with the Gold Road board to advance its proposal.
“The offer price represents a 28% premium to Gold Road’s closing share price of A$2.38 and a 44% premium when considering the value of De Grey Mining (ASX: DEG) shares” it holds, BMO Capital Markets analyst Raj Ray said in a note on Monday. “We currently ascribe a total value of US$1.1 billion for Gold Fields’ 50% interest in Gruyere.”
Shares in Gold Fields fell 5% to 37.98 rand (C$3) apiece in Monday afternoon trading in Johannesburg, valuing the company at 341 billion rand. Stock in Gold Road Resources rose 3% on Monday to close at A$2.45 each for a market capitalization of A$2.66 billion.
Gold Fields made the proposal amid record-high gold prices, which recently surpassed $3,000 per oz. fuelled by economic uncertainty and geopolitical tensions.
Went public
Gold Road criticized Gold Fields’ decision to publicize the bid, calling it “extremely disappointing” and arguing that it failed to recognize the value of a potential underground expansion at Gruyere. As an alternative, Gold Road proposed buying out Gold Fields’ 50% stake in the mine, but the South African gold producer rejected the counteroffer.
“Gold Fields is disappointed that the Gold Road board has not constructively engaged on key elements of the proposal, which would have allowed both parties to confidentially progress towards an outcome,” it said.
Gold Fields’ hostile bid also complicates Northern Star Resources’ (ASX: NST) A$5-billion deal to buy out smaller rival De Grey Mining, as Gold Road holds a 17% stake in De Grey.
Gold Fields would vote in favour of the Northern Star transaction, BMO’s Ray said. Gold Fields is restricted from accumulating a relevant interest of greater than 10% in Gold Road during the Gruyere joint venture standstill period, he added.
“Under Gold Fields’ proposal, it is their intention for Gold Road’s shareholding in De Grey to be voted in favour of Northern Star’s transaction, and would not present a competing proposal for De Grey,” the analyst said.
Gruyere mine
The Gruyere mine, with a life of 10 years, produced 287,000 oz. in 2024 and is guided to produce 325,000 to 355,000 oz. this year at all in sustaining costs of $1,511 to $1,636 per oz., Ray noted.
“The acquisition of Gold Road Resources would not just give Gold Fields full control of Gruyere, but access to its extensive exploration portfolio around the mine,” Ray said.
The Gruyere mine has produced more than 1.5 million oz. since kicking off operations in 2019. In the final three months of 2024, the operation recorded its highest-ever quarterly output at nearly 92,000 ounces.
Gold Road discovered Gruyere in 2013, and sold half to Gold Fields in 2016 to help finance mine development and further exploration.
Be the first to comment on "Gold Road rejects $3B takeover bid from Gold Fields"