Gold Fields and Gold Road Resources are expected to make an announcement early next week on the outcome of a renewed bid by Gold Fields’ for ASX-listed Gold Road after a previous bid was rejected in March.
On Friday, Gold Road shares were suspended from trade on ASX due to media speculation about a change of control and it said it expected to resume trade by Tuesday. Gold Fields confirmed in a notice to the JSE that there were active discussions under way with Gold Road.
In March, Gold Road rejected Gold Fields’ takeover bid which valued Gold Road at A$3.3bn (R37.7bn), saying it materially undervalued the company.
At the time, it was widely speculated that Gold Fields would table a higher offer for Gold Road, especially after Gold Fields appeared to be conserving its cash by raising debt in March to repay a US$750m bridging loan facility instead of using existing cash holdings. Gold Fields is expected to generate US$1.5bn in free cash flow this year, according to a Bloomberg forecast.
Gold Road’s attractions are obvious. It is a 50/50 JV with Gold Fields in the Gruyere mine, an open-pit mine in West Australia with a current life of ten years. There is extensive drilling under way to define the ore resource under Gruyere. Gold Road said in its Q1 2025 presentation on 28 April that it was targeting 1-1.5 million ounces in the underground section, which would significantly extend the mine’s life.
Gold Road said that although Gruyere’s production was down for the quarter due to ore processing issues, it is still expected to produce between 325,000 and 350,000oz of gold this year. Gold Road itself is debt-free and is holding about US$204m (R3.7bn) in cash and cash equivalents and about A$1.1bn (R13bn) in shares in Northern Star.
Gold Fields will release its Q1 operating update on May 6.
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