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Investing.com -- Gold Fields (NYSE:GFI) has proposed to acquire 100% of Gold Road Resources, which owns a 50% stake in the Gruyere mine in Western Australia. The other half of the mine is owned by Gold Fields.
The non-binding offer is priced at A$3.05 per share, bringing the total equity value of Gold Road to A$3.3 billion (or an enterprise value of A$2.4 billion).
BMO analysts noted that the acquisition of Gold Road Resources would not only give Gold Fields full control of Gruyere, but also access to its extensive exploration portfolio around the mine. Gold Fields has stated it will continue to engage with the Gold Road board to advance its proposal.
However, Gold Road’s board has rejected this offer. Instead, they countered with a proposal to buy Gold Field’s 50% stake in the Gruyere mine, which was subsequently declined by Gold Fields.
The current value of Gold Field’s 50% interest in Gruyere is estimated at US$1.1 billion (approximately A$1.8 billion).
The offer price from Gold Fields represents a 28% premium to Gold Road’s closing share price of A$2.38 per share. When considering the value of De Grey Mining shares, which Gold Road has a 17.3% stake in according to Northern Star Resources (ASX:NST) scheme booklet, the premium rises to 44%.
As part of the proposal, Gold Fields intends to vote Gold Road’s shareholding in De Grey in favor of a transaction with Northern Star. Gold Fields has confirmed it will not present a competing proposal for De Grey.
The Gruyere mine, which has a lifespan of 10 years, produced 287,000 ounces (on a 100% basis) in 2024 and is expected to produce between 325,000 and 355,000 ounces in 2025 at an all-in sustaining cost (AISC) of A$2,400-2,600 per ounce (approximately US$1,511-1,636 per ounce).
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