Gold Road Resources (ASX:GOR) is a potential merger and acquisition target, especially for a suitor interested in its 17% stake in De Grey Mining (ASX:DEG), Euroz Hartleys said in a Monday note.

On Monday, the company logged record production at its Gruyere joint venture in Western Australia in the December 2024 quarter, but annual output slightly missed its guidance.

Despite missing its guidance, Euroz Hartleys believes that the negative impact has already been priced in, and the market is likely to focus on the upcoming positive catalysts.

The company's quarterly performance and production levels have driven substantial cash flow, bringing the total cash balance to AU$173.9 million with no debt, Euroz Hartleys said.

Euroz Hartley believes that as Gold Road Resources' cash balance grows, shareholder pressure for increased returns is expected to rise in the near term.

The financial services firm also notes that while Gold Road is unlikely to trade at a premium compared to its peers due to its non-operating joint venture status, the current discount to its peers is considered too high.

The firm expects this gap to close as the company continues to post strong production and cash flow, particularly in the December quarter and into 2025.

However, a potential takeover remains a plausible outcome, with Northern Star Resources' (ASX:NST) planned acquisition of De Grey Mining expected to be implemented in late April or early May 2025.

Euroz Hartleys maintained a buy rating and price target of AU$2.65 on Gold Road Resources.

Shares of Gold Road Resources fell nearly 1% in recent Friday trade.