Gold Road defends rejection of $2.1B takeover bid

Gold Road Resources (ASX: GOR) chairperson Tim Netscher has defended the company’s decision to reject an unsolicited a A$3.3 billion ($2.1 billion) takeover bid from South Africa’s Gold Fields (JSE, NYSE: GFI), its joint partner in the Gruyere mine in Western Australia.

At the heart of the matter lies the price and timing of the bid, Duncan Gibbs, the Australian company’s chief executive has said. Gold Fields had proposed acquiring 100% of Gold Road’s shares through a scheme of arrangement, offering A$2.27 per share in cash, along with a variable component linked to Gold Road’s stake in De Grey Mining.

In response, Gold Road put forward a counter-proposal to acquire Gold Fields’ stake in the Gruyere mine at the same implied valuation as the rejected offer. Gold Fields dismissed this counter-offer and and declined to engage in further discussions about selling its interest.

Netscher said in a letter to shareholders on Thursday that Gold Road has not sought to pursue any additional proposals to acquire Gold Fields’ interest in Gruyere and does not intend to do so as part of any further engagement with Gold Fields regarding their proposal. 

The executive characterized the counter-proposal as a response to an opportunistic bid, describing the offered price as “patently inadequate” and, therefore, highly attractive to the purchaser.

“Gold Fields’ rejection of our counter-proposal signals that, like us, they see significant value in Gruyere beyond what was offered in their proposal,” Netscher stated in the letter.

Gold Road said it is open to discussions with Gold Fields, though Netscher emphasized that any transaction must prioritize the best interests of shareholders and provide full and fair value.

The Gruyere mine has produced more than 1.5 million ounces 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.