SHARES in Australia’s Gold Road Resources climbed an all-time peak on Tuesday, a day after rebuffing South African miner Gold Fields’ $2.1bn acquisition proposal, deeming it to significantly undervalue the firm.
Gold Road Resources’ stock jumped as much as 15.5% to a record high of A$2.830 earlier in the day, said Reuters. It was last trading up 13.9%.
The Australian explorer said it had rejected Gold Fields’ offer after market hours on Monday, considering it to be “highly opportunistic”. Gold Road shareholders would have received A$3.05 ($1.92) per share under the South African miner’s offer.
“After a bid is rejected, the takeover company usually comes back with a second more lucrative bid,” said Jessica Amir, a market analyst at trading platform Moomoo, suggesting that the market has a similar view.
Gold Fields’ offer targeted consolidating control over the cost-efficient, long-life Gruyere gold mine in Western Australia, a venture it presently operates in collaboration with Gold Road Resources.
“The offer attributes no value at all to the potential underground expansion of the Gruyere mine,” Gold Road said. A counter offer was tabled by Gold Road for buying out its partner’s share in the gold mine but it was rejected by the Johannesburg-based miner.
Gold Fields’ CEO Mike Fraser said Northern Star Resources’ imminent $3.3bn acquisition of its peer De Grey Mining which counts Gold Road as its top shareholder, acted as a catalyst for Gold Fields’ bid.
