Gold Road jumps on news of unsolicited bid from rival
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More news: Shares in Gold Road Resources have jumped more than 10% to $2.71 after the gold miner said it had rejected an unsolicited $3.3 billion takeover bid from South Africa’s Gold Fields earlier this month. The company said the proposal from Gold Fields, with which it jointly owns the Gruyere gold mine in Western Australia, materially undervalued the business, and it tabled an alternative offer to buy out Gold Fields' 50% stake in Guyere, which was also rejected.
Investors are likely counting on further negotiations that could deliver a better proposal. Gold Road shares have surged 60% over the last 12 months, riding on the back of record gold prices.
Gold Road rejects $3.3b bid from South African partner
The news: Miner Gold Road Resources says it rejected a $3.3 billion takeover bid from South Africa’s Gold Fields earlier this month as it materially undervalued the company.
The numbers: Gold Road said in a statement late on Monday the unsolicited offer from Gold Fields, with which it jointly owns the Gruyere gold mine in Western Australia ,valued its business at $2.27 per share plus $869 million for its 17.3% stake in De Grey Mining. Gold Road shares closed at $2.45 each on Monday.
The context: Gold Road called the proposal “highly opportunistic” as it coincided with lower March quarter output and said it attributed no value at all to the potential underground expansion of the Gruyere mine. The Australian miner says it tabled an alternative offer to buy out Gold Fields' 50% stake in Gruyere, but this was rejected by the Johannesburg-based miner.
The bid also comes just months after Northern Star Resources announced its $5 billion acquisition of De Grey Mining in December, in which Gold Road holds the largest stake. Gold prices hit a record high of USD3057 per ounce earlier this month, which has buoyed valuations of gold miners across the world and prompted consolidation in the sector.
The source: ASX
