Australia’s Gold Road Resources has accused Gold Fields of sowing divisions between Gold Road’s board and shareholders when it made public the terms of a R38bn takeover bid this week. The mid-tier gold miner stood by its decision to reject what it calls an “opportunistic” deal from Gold Fields.
In a letter to shareholders on Thursday, Gold Road chair Tim Netscher said he met with Gold Fields CEO Mike Fraser a number of times after rejecting the offer.
“My last phone call with the Gold Fields CEO on Sunday March 23 made it clear that it was in [their] court as to whether (they) wished to table a revised, and improved, proposal for the Gold Road board’s consideration.
Instead of continuing our engagement, Gold Fields elected to publicly announce the terms of its proposal in what must be considered an effort by Gold Fields to seek to create division between the Gold Road board and its shareholders. We will not let this happen,” Netscher vowed.
Globally diversified Gold Fields is seeking to acquire 100% of Gold Road at AU$2.27 per share, plus a variable cash component linked to Gold Road’s share in De Grey Mining. Gold Fields operates the Gruyere mine in Western Australia and Gold Road holds a non-operating joint venture interest in the asset.
Gold Road rejected the bid on March 14, and responded by tabling a counteroffer to acquire Gold Fields’ 50% interest in the Gruyere mine. However, Gold Fields dismissed this and refused to engage in any further talks on selling its stake in Gruyere.
“The counter-proposal to acquire Gold Fields’ interest in Gruyere was in response to an opportunistic proposal, at a price that is patently inadequate and therefore highly attractive to the purchaser.
Through its unsolicited proposal, and its rejection of Gold Road’s counter-proposal, Gold Fields has made it clear that there is a division between the value that it expects Gold Road shareholders to accept for their shares and their interest in Gruyere, and what it might contemplate for its own interest in Gruyere.
If the price reflected in the Gold Fields proposal is not good enough for Gold Fields, why would it be good enough for Gold Road shareholders?” Netscher asked in the letter.
He said Gold Road believes this rejection signals that, like Gold Fields, it also sees material value in Gruyere beyond what has been put on the table in the current Gold Fields proposal.
The Australian gold miner previously accused Gold Fields of opportunistically tabling an offer that did not take into account studies into the potential underground expansion of the Gruyere mine, which are still under way.
There has been a flurry of M&A activity since the gold price hit record highs, sparked mainly by US trade wars. Investors consider gold a safe haven in volatile periods.
Gruyere has about eight years’ life of mine, and Gold Fields’ pursuit of the other half of the joint venture points either to a more fractious relationship between the companies or Gold Fields looking to add ounces from a mine that it already operates
— Robbie Proctor, investment analyst at Anchor Capital
Earlier this week, Fraser said their proposal represented a compelling opportunity for Gold Road shareholders to realise an attractive and certain cash price for their investment.
“We are disappointed that Gold Road’s board has rejected our proposal. Gold Fields will continue to seek the engagement of the Gold Road board to consider the merits of the proposed acquisition and to advance the proposal,” he said.
Fraser argued, however, that consolidation of the remaining 50% interest in Gruyere would eliminate “dis-synergies” that arise through the current joint venture ownership. “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.”
Commenting on the deal, Robbie Proctor, an investment analyst at Anchor Capital, said looking at Gold Fields’ production pipeline a “fractious” relationship with Gold Road could be one of the reasons the South African miner proposed a takeover bid.
He said Gold Fields’ medium-term production profile was favourable, given the ramp-up of the Salares Norte project in Northern Chile from the second half of 2025, and its proposed joint venture with AngloGold in Ghana.
“Gruyere has about eight years’ life of mine, and Gold Fields’ pursuit of the other half of the joint venture points either to a more fractious relationship between the companies or Gold Fields looking to add ounces from a mine that it already operates,” said Proctor.
Proctor said another factor contributing to the decline is the rejection of the bid by Gold Road, which raises the spectre of Gold Fields either offering a higher price or going the hostile route.
“We believe Gold Road’s assertion that the timing is opportunistic is likely a tactic to drive up the perceived value of the asset to Gold Fields and its own shareholders beyond the current production profile. The Gruyere exploration programme is still in the very early drilling stage, without any data confirming the economic viability of an underground expansion,” he said.
Proctor said, based on public comments from the two companies, their relationship appears to be under strain.
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