GOLD Fields said on Monday it had bid A$3.3bn (about R37.7bn) to consolidate its holding in 350,000 ounce a year Australian gold mine Gruyere.
This is in terms of a A$3.05 per share offer for ASX listed Gold Road Resources, Gold Fields’s 50% partner in the mine. Gold Fields, which bought 50% of Gruyere for A$350m in 2016, is the operator of the mine.
However, Gold Road rejected Gold Fields’ offer which represents a 28% premium to the Australian firm’s closing share price, and a 21% premium to the 30-day volume-weighted average share price.
Instead, Gold Road fired back an offer for Gold Fields’ stake in Gruyere – which the South African said today it had rejected.
Mike Fraser, Gold Fields CEO said the group would continue to “engage” with the board of Gold Road Resources on its offer, adding that the group would remain “disciplined”.
He said: “We are disappointed that Gold Road’s board of directors has rejected our proposal. Consolidation of the remaining 50% interest in Gruyere will eliminate dis-synergies that arise through the current joint venture ownership.”
Gold Fields has its hands full given it last year completed the $1.2bn takeover of Osisko Mining, a Canadian firm, on the way to developing the proposed 300,000 oz/year Windfall project which is expected to cost C$1.1bn.
But Gold Fields said today it was confident it had the financial firepower. Gold Fields ended its 2024 financial year (December 31) with $2.09bn in net debt, increased from a net debt position of $1.02bn in the 2023 financial year.
It also said it didn’t expect difficulties winning foreign investment approval in Australia given its long-standing activities in the country.
Fraser said the proposed deal “would crystallise significant value” for Gold Road shareholders “in a volatile market”. Gold Fields lodged its offer for Gold Road on March 7 when the gold price was trading at US$2,918/oz, 3.5% below today’s $3,019/oz. Analysts believe the dollar gold price could head higher.
Gold Fields’s offer also includes Gold Road’s stake in ASX-listed De Grey which in December was subject to an all-share takeover by Northern Star Resources, another Australian miner. Gold Fields said it did not intend to make a competing offer for De Grey.
The offer comprises a fixed portion of A$2.27/share plus a variable portion equal to the value of each shareholders’ proportion of Gold Road’s stakes in De Grey Mining. In terms of Northern Star’s December deal, it offered 0.119 new Northern Star shares for each De Grey share held.
Gold Fields had a tough year in 2024, largely owing to the first half. Attributable gold production ended up 10% lower at some 2.07 million oz. But it benefited from the strong gold price, declaring a 700 South African cents per share final dividend, taking the full-year dividend to R10/share – a 34% increase year-on-year.
