By Rhiannon Hoyle

The primary sticking point in talks about a potential acquisition of Australian miner Gold Road Resources by South Africa's Gold Fields was the price, according to the Australian company's chief executive.

Gold Road on Monday said it had rejected a roughly $2.1 billion takeover proposal this month from Gold Fields, its joint venture partner in the Gruyere gold mine in Western Australia's northeastern goldfields region. It called the offer highly opportunistic.

In an interview on Wednesday, Gold Road CEO Duncan Gibbs said the company remains open to further talks with Gold Fields but noted that, based on conversations with investors, most of its shareholders do not support a takeover at the price its partner proposed.

Gold Fields offered to buy Gold Road for 3.05 Australian dollars per share, equivalent to $1.92, representing a 21% premium to its average price over the previous month.

"All of the correspondence and communications has been around value," Gibbs said. "I think that really places it back to Gold Fields to consider the value that they put on the table."

Gibbs said Gold Road made a counterproposal to acquire Gold Fields' interest in the Gruyere joint venture, valuing it at 2.3 billion Australian dollars, equivalent to $1.4 billion--in line with the valuation implied in its partner's offer.

Gold Fields rejected that proposal. "In fact, they've rejected any engagement in selling Gruyere at any price," he said.

The Australian miner made its counteroffer to highlight that Gold Fields' proposed price for Gold Road was too low, said Gibbs. If Gold Road were to pursue the acquisition of Gold Fields' 50% stake in Gruyere, it would likely need a new partner, he said.

"We've had some inbound inquiries given the public situation here, and we will consider that as a strategy," Gibbs said. However, he noted that the company must weigh the potential benefits of such a move against the value shareholders could receive from a takeover.

Gold Fields' all-cash proposal comes against a backdrop of surging gold prices, which recently surpassed $3,000 a troy ounce for the first time, as economic uncertainty fuels demand for the metal perceived as a safe haven.

When announcing its takeover bid, Gold Fields argued the Gruyere operation would be better off under its sole ownership, eliminating inefficiencies associated with the current joint-ownership.

Mike Fraser, Gold Fields' CEO, said the miner was disappointed that Gold Road's directors had rejected its proposal and would continue to seek talks on a potential takeover. He defended Gold Fields' offer, stating that it provided Gold Road shareholders with "an attractive and certain cash price for their investment."

A spokesman for Gold Fields declined to comment further on Wednesday.

According to Gibbs, the companies have not spoken about the proposal since it was made public.

Gold Fields had not previously approached Gold Road about its interest in acquiring the Gruyere mine before emailing the nonbinding indicative offer on March 7, Gibbs said. Gold Road rejected the proposal a week later.

Gibbs said the companies had extensive discussions about the proposal, including multiple phone calls and meetings in Perth, where Gold Road is based.

"The narrative that we haven't engaged is not true," he said.

While Gold Road raised several concerns regarding the risks and conditions of the proposal, the key issue was price, Gibbs said.

One reason Gold Road believes the bid undervalues its assets is ongoing studies into a potential underground expansion of the Gruyere mine, which could meaningfully extend the mine's lifespan, he said.

Gold Fields has, to date, only put forward one proposed price, said Gibbs.

"There's been no to and fro here in terms of a price discussion: It's take it or leave it," he said. "And then that's gone straight into a public arena and what investment bankers would generally call a bear-hug strategy."

A so-called bear hug is a deal-making tactic where a company publicizes its offer in hopes that shareholders will pressure the target company to accept or negotiate.

Gibbs was in a routine investor meeting on Monday when Gold Fields unexpectedly published the details of its proposal, catching Gold Road by surprise. That same day, the company's new head of investor relations, Brian Massey, started his role.

"The fact that they went from conversations that occurred in the previous week to that really aggressive approach effectively immediately… I think it's probably fair to say we were not expecting that," he said.

Gold Road sold a 50% interest in Gruyere--then just a project--to Gold Fields in 2016.

Gold Fields, the mine's operator, proposed acquiring its partner through a scheme of arrangement, meaning it would require board approval, an assessment by an independent expert and a shareholder vote, said Gibbs.

"We don't believe they're there yet," he said. But "everybody's got everybody's contact details here."

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

March 26, 2025 02:29 ET (06:29 GMT)

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