Gold Fields looks set to improve $3.3b takeover offer for Gold Road Resources amid speculation

The Gruyere takeover tussle could soon reach a climax after South Africa’s Gold Fields suggested it wants a second bite of the cherry for Gold Road Resources. Johannesburg-listed Gold Fields on Friday afternoon “confirmed” there are “active discussions with Gold Road” regarding its takeover proposal. “Given the nature of the Proposed Transaction, there can be no certainty that engagement will materialise in a transaction being successfully concluded.” Gold Field’s detail-scarce announcement followed Gold Road earlier in the day ducking into a trading halt following “media speculation regarding a potential change of control transaction”. Trade media outlet Money of Mine on Friday morning aired a rumour that Gold Fields had recently increased its $3.31 billion takeover offer. Gold Road and Gold Fields are 50/50 partners in the Gruyere gold mine in central WA. Gold Fields has run Gruyere since first gold was poured in 2019 and in March aired out the $3.3b bid to buy out Gold Road, which infuriated the takeover target’s chief — Duncan Gibbs. Mr Gibbs was caught off-guard by the negotiations becoming public and after rebuffing the “low ball” takeover proposal he accused Gold Fields of purposely withholding information about an underground mining study. Ian Murray, the man who brought Gold Road and Gold Fields together at Gruyere, told The West Australian last month Gold Fields should have to cough up at least another $1b to seal the deal. Mr Murray led Gold Road through its discovery of the Gruyere deposit during 2013 and its sale of a half stake in the mining project to Gold Fields for $350 million three years later. “As far as I’m concerned, there’s at least another $1 or $1.50 (per share) that Gold Fields should be offering,” he told The West at the time. This would equate to a top up on the $3.31b offer of between $1.08b and $1.63b. Mr Murray based part of his assessment on the circa $30 million per year saved from removing Gold Road’s corporate overheads, the net smelter royalty Gold Fields is set to pay Gold Road, and the tax benefits Gold Fields would be in line to receive. He also shared Mr Gibbs’ sentiment that there is considerable underground mining potential at Gruyere not fully baked into Gold Fields’ current bid. But given Gold Fields holds the operational cards at Gruyere, there is little chance of an interloper throwing its hat in the ring for Gold Road. This puts a cap on the price Gold Fields would be willing to pay, analysts believe. Shares in Gold Road were down 2 per cent on Friday morning before going into the trading halt.