Gold Road Resources, a mid-tier Australian gold producer, has rejected South Africa-based mining major Gold Fields’ A$3.3bn ($2.09bn) non-binding, indicative acquisition proposal, citing concerns over valuation.
The board of Gold Road Resources stated that the offer failed to account for the potential expansion of the Gruyere gold mine in Western Australia.
Gold Fields’ proposal, priced at A$3.05 ($1.93) per share, comprised a fixed cash component of A$2.27 ($1.43) and a variable amount based on Gold Road Resources’ stake in De Grey Mining.
The acquisition aimed to consolidate Gold Fields’ ownership of Gruyere, where Gold Road Resources holds a 50% non-operating interest.
Gold Road Resources, which is listed on the Australian Securities Exchange (ASX), described the bid as opportunistic, noting that it coincided with a temporary drop in production due to maintenance issues at Gruyere.
The company also highlighted that the offer did not reflect the ongoing drilling program assessing Gruyere’s underground expansion potential.
Gold Fields CEO Mike Fraser said: “We believe our Proposal represents a compelling opportunity for Gold Road shareholders to realise an attractive and certain cash price for their investment.”
In response, Gold Road Resources submitted a counterproposal to acquire Gold Fields’ stake in Gruyere, proposing to fund the transaction through cash reserves, asset sales, debt, and equity issuance. However, Gold Fields declined to pursue this alternative.
Gold Fields, which remains committed to its bid, reaffirmed its ability to finance the transaction and obtain regulatory approvals.
Fraser said: “Gold Fields will remain disciplined with regards to the Proposed Acquisition of Gold Road and prudent in its acquisition strategy to ensure continued maximisation of shareholder value.”
Gold Fields has also confirmed it will not make a competing bid for De Grey Mining. However, it expects Gold Road Resources to back Northern Star Resources’ proposed acquisition of De Grey, given the former’s existing shareholding in the company.
