Gold M&A Continues to Heat Up as Gold Road Knocks Back Gold Fields Proposal
Shared ownership of Western Australia's Gruyere gold mine sets up another M&A battle.
Gold Fields (JSE: GFI) revealed on Monday that its Australian joint venture partner Gold Road Resources (ASX: GOR) had rejected a non-binding takeover proposal.
Gold Fields said it had proposed a A$3.05 per share cash offer, comprising a fixed portion of A$2.27 per share plus a variable portion equal to the value of each shareholders’ proportion of Gold Road’s 17.3% shareholding in De Grey Mining (ASX: DEG).
In December, De Grey agreed to a A$5 billion takeover offer from Northern Star Resources (ASX: NST).
The proposed offer price represents a 28% premium to Gold Road’s closing price on Friday and a 44% premium to the see-through valuation for Gold Road after adjusting for the value of the De Grey stake.
The offer values Gold Road at A$3.3 billion and implies a total enterprise value of A$2.4 billion.
Gold Field said the premia were even more significant when considering that Gold Road did not control either of its major interests.
Gold Fields and Gold Road are 50% partners in the Gruyere gold mine in Western Australia, which is guided to produce 325,000-355,000 ounces of gold this year.
Gold Fields operates the mine and said the proposal provided certainty of value for Gold Road shareholders.
Offer rejected
The board of Gold Road rejected Gold Fields’ proposal, which Gold Fields described as disappointing.
As part of its rejection, Gold Road expressed a preference to enter into an alternative transaction to buy Gold Fields’ share of Gruyere, funded from existing cash (which stood at A$173.9 million at December 31), monetisation of Gold Road’s marketable securities, existing or new debt facilities, and the issue of new equity.
Gold Fields said it would not proceed with the alternative transaction.
The company said its intention was for Gold Road’s De Grey stake to be voted in favour of Northern Star’s offer.
Gold Fields said it had no intention of presenting a rival bid to De Grey and was committed to seeing the full benefit of the De Grey/Northern Star equity position being delivered to Gold Road shareholders.
Gold Road has not publicly stated its voting intentions ahead of the scheme meeting to be held in Perth on April 16.
“We consider the most likely scenario that Gold Road will vote in favour of the transaction in which case it would receive Northern Star scrip with a current market value of A$890 million before capital gains taxes,” Argonaut analyst Patrick Streater said shortly after the Gold Fields proposal was made public.
Gold Fields CEO Mike Fraser described its proposal as a compelling opportunity for Gold Road shareholders to realise an attractive and certain cash price for their investment.
He said Gold Fields would continue to seek to engage with Gold Road.
“Consolidation of the remaining 50% interest in Gruyere will eliminate dis-synergies that arise through the current joint venture ownership,” he said.
“The proposed acquisition would be consistent with our strategy to improve the quality of our portfolio through investment in high-quality, long-life assets, like Gruyere, similar to our recent acquisition of the Windfall project.”
Fraser added that Gold Fields would remain disciplined, in line with its commitment to maintain a strong balance sheet.
Gold M&A continues
Gold Fields’ proposal follows two multibillion-dollar gold deals already announced in 2025.
In February, Equinox Gold Corp (TSX: EQX) and Calibre Mining Corp (TSX: CXB) announced a nil-premium merger of equals which would create a Canada-focused producer with an estimated market capitalisation of C$7.7 billion.
Last week, Ramelius Resources (ASX: RMS) announced the acquisition of developer Spartan Resources (ASX: SPR), valuing Spartan at A$2.4 billion.
Speaking in Perth on Thursday, Perseus Mining (ASX: PRU) chief financial officer Lee-Anne de Bruin said acquisitions were becoming more difficult in the current record gold price environment.
“It’s difficult to look at assets today, at current prices and current share prices, to work out whether you're going to overpay,” she said.
“I think there is more of a merger market out there for mergers of equals.”
Perseus, which has been acquisitive in recent years, has a 17.9% in A$1 billion Guinea-focused developer Predictive Discovery (ASX: PDI).
de Bruin pointed out that Perseus would have to pay a premium then fund the circa US$500 million development of the Bankan gold project in Guinea.
“What are you paying for that asset before you even walk through the front door?” she said.
“So it depends on your view on gold price, but we're in a watching brief and we are looking out there at what’s available.”