Gold Road rejects $2.1B takeover bid from Gold Fields

Australia’s Gold Road Resources (ASX: GOR) has rejected a A$3.3 billion ($2.1bn) takeover bid from South Africa’s Gold Fields (JSE, NYSE: GFI), calling the offer “highly opportunistic” and saying it undervalued the company.

Gold Fields said the all-cash proposal was made on March 7 amid record-high gold prices, which recently surpassed $3,000 per ounce fuelled by economic uncertainty and geopolitical tensions.

The Johannesburg-based miner had offered A$3.05 per share — a 21% premium to Gold Road’s average share price over the past month. The deal would have given Gold Fields full control of the Gruyere joint venture mine in Western Australia.

Gold Road discovered Gruyere in 2013, and sold a 50% stake to Gold Fields in 2016 to help finance mine development and further exploration.

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 company 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 ($3.5bn) deal to buy out smaller rival De Grey Mining (ASX: DEG), as Gold Road holds a 17.3% stake in De Grey.

Gold Fields would vote in favour of the Northern Star transaction, BMO Capital Markets analyst Raj Ray said in a note Monday. 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. 

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.