Gold Fields (JSE: GFI) has crossed the final hurdle to complete the A$3.3 billion cash takeover offer of Australia’s Gold Road Resources and has wasted no time offloading one of its key assets.
The Supreme Court of Western Australia made orders today approving the deal and the scheme of arrangement has become effective.
Gold Road shareholders will receive a fixed cash portion of A$2.52 for each share held, less the fully franked special dividend of A43.69c per share that was declared by the Gold Road board last week; and a variable cash consideration of A98.1c per share, being the amount equal to each shareholder’s pro-rata proportion of the value of Gold Road’s shareholding in Northern Star Resources (ASX: NST).
The takeover of Gold Road consolidates Gold Fields’ ownership of the Gruyere mine in Western Australia.
Gold Road discovered the multimillion-ounce Gruyere deposit in October 2013 and sold a 50% stake in the project to Gold Fields for A$350 million cash in late 2016.
The mine poured first gold in mid-2019 and produced 1.52 million ounces of gold from the start of production up until the end of 2024.
Gruyere has underperformed this year, with production of 196,554oz for the first eight months of the year.
Guidance for 2025 was lowered last week to 310,000-320,000oz from 325,000-355,000oz, while all-in sustaining cost guidance was increased to A$2600-2800 per ounce from A$2400-2600/oz.
Shares sold
Gold Road’s other key asset was a 17.3% stake in De Grey Mining, which converted into Northern Star shares when Northern Star completed its A$6 billion scrip takeover of De Grey earlier this year.
When Gold Fields announced its takeover of Gold Road, it said there were no specific plans for the Northern Star stake.
Northern Star shares have risen by around 27% since the Gold Fields-Gold Road transaction was announced and are trading near all-time highs.
Today, Gold Fields announced it had entered into a share forward transaction with J.P. Morgan Securities to dispose of the stake.
The shares were sold via a block trade at a price of A$22.05 each, for total proceeds of A$1.1 billion.
Gold Fields said the proceeds would be used to repay a portion of the acquisition financing bridge facility used to fund the Gold Road transaction.
“We welcome the achievement of these key milestones in Gold Fields’ acquisition of Gold Road,” Gold Fields CEO Mike Fraser said.
“This acquisition is a strategically logical, low risk opportunity to further improve the quality of our portfolio through consolidation of a high-quality asset that we already operate.
“We appreciate the partnership we have had with Gold Road and look forward to further developing the potential of the Gruyere gold mine and Gold Road’s exploration packages to the benefit of Gold Fields’ shareholders.”
Around 50% of Gold Fields’ production from next year will come from Western Australia.
Separately, Gold Fields announced earlier this week that it had sold its 19.5% stake in Galiano Gold Inc (TSX: GAU) for C$3 per share, for total gross proceeds of approximately C$151.4 million.