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Gold mergers & acquisitions are again live and kicking in 2025, as South African miner Gold Fields consolidates its 50% stake in the Gruyere project to full ownership and further cements its presence in Western Australia’s gold sector.
The South African miner – after a $3.3 billion bid was rejected in March – has had a $3.7 billion second bid for its JV partner Gold Road Resources accepted.
Under the deal, Gold Road (ASX : GOR) shareholders receive fixed cash consideration of $2.52 per share, with a variable cash component equal to the full value of the shareholders’ proportional stake in Northern Star Resources (ASX : NST).
That makes it a consideration of $3.40 per share – a 39% premium on Gold Road’s 30-day VWAP – and the miner says it’s rewarding shareholders with a special dividend valued at the board’s discretion.
Battle over Gruyere
The takeover play comes after Gold Road rejected Gold Fields’ $3.3 billion buyout bid in March, saying the offer materially undervalued the company and was “highly opportunistic”.
Low-cost and with plenty of exploratory upside, the Gruyere operation has produced >1.5 million ounces of gold since 2019, and with gold prices constantly pushing to all-time highs, it was an attractive target.
A first offer came in at a fixed portion of $2.27 per Gold Road share plus a proportional stake of the miner’s stake in Northern Star for an all up figure of $3.05 per share.
The WA miner baulked at the low-ball valuation that came just after it announced low production levels for Q1, rejecting it and making a tit-for-tat bid to takeover Gold Fields with its own paltry offer which the latter rejected.
Gold Road then released scoping study details in April that showed the prospectivity of underground mining that could extend the mine’s life by 12 years and output to 350,000ozpa – announcing to the world just how attractive a buy it is.
So attractive that Gold Fields didn’t waste time on another bidder coming in and up its offer by 12% from $3.3 billion to get it over the line.
Consolidation run
The gold producer has been in WA for quite some time and is not new to M&A either.
St Ives in the Goldfields was part of its initial entry to the Australian market in a JV with WMC’s Agnew mine near Leinster in 2001.
It later bought Canadian miner Barrick Gold’s Granny Smith and Wallaby mines before nabbing half of Gold Road when it was a junior explorer via a 50% buy-in.
Gold Fields’ Gruyere purchase solidifies the long-term future of its WA mines – the most substantial and profitable part of the Joburg-based miner’s >2 Mozpa portfolio.
In the past few years the miner has gone through a phase of joint ventures – foraying into two gold mines in Ghana (one it’s since exited) and entering a $600m JV with Osisko at Windfall in Quebec in 2023 – which Gold Fields subsequently bought out relatively high for C$1.93 billion ($A2.15 billion) last year.
“They went through a period of multiple JVs, and now they seem to be consolidating, either by taking full ownership or exiting entirely, like they did with Galiano in Ghana,” Commodity Discovery Fund consultant Neil Adshead said speaking to Kitco.
“[The takeover] illustrates I think that there seems to be a lot more action more excitement perhaps in Australia. It does seem to be a more exciting market for investors and companies at the moment than perhaps the Canadian market.”
The deal is the latest in a flurry of takeover action in WA’s gold scene this year.
Notably Northern Star’s takeover of De Grey Mining and its 11Moz+ Hemi deposit in the Pilbara for $5 billion. In addition, Ramelius Resources’ (ASX : RMS) $2.4 billion purchase of Spartan Resources (ASX : SPR).
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