Underground twist in miners Gold Road and Gold Fields’ takeover tussle
Gold Road says shareholders will benefit from knowing the true potential value of taking operations at the jointly run Gruyere mine in WA underground, after it was handed a report.
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Takeover target Gold Road says it is in shareholders’ best interests to finally have some indication of the potential value of a move underground at the Gruyere mine in Western Australia out in the open.
Perth-headquartered Gold Road has been hassling South Africa’s Gold Fields for an underground mining study amid a bitter takeover battle.
Gold Road last month described a $3.3bn takeover offer lobbed by Gold Fields as “low ball and opportunistic”, and alleged that it had been kept in the dark about the potential for underground mining at Gruyere.
The two companies are partners in the mine, which is managed and operated by Gold Fields.
Gold Road received Gold Fields underground mining study last Friday and after crunching the numbers released its own assessment, showing the underground option could deliver Gold Road maximum production of 178,000 ounces a year over a 12-year mine life with a potential upside from more exploration.
The Gold Road share price climbed almost 4.5 per cent to $3.07 on Tuesday.
Johannesburg-listed Gold Fields lobbed a $3.05-a-share takeover bid for Gold Road on March 7 that included the value of Gold Road’s 17.3 per cent stake in De Grey Mining, which is in turn the target of a $5bn takeover offer from Northern Star.
D
e Grey shareholders are due to vote on the Northern Star takeover offer next week, with Gold Road continuing to play its cards close to its chest.
In response to the Gold Fields takeover bid, the Gold Road board said it was willing to pay $2.3bn for Gold Fields’ 50 per cent share in Gruyere – the same value ascribed to its 50 per cent stake by Gold Fields.
Gold Road boss Duncan Gibbs took a more conciliatory approach on Tuesday after previously blasting Gold Fields running of Gruyere and saying “any Australian company could do a better job of running that asset”.
“The doors open, we have got each other’s phone numbers,” he said.
Gold Fields announced a bond issue last week that has restricted its ability to engage in talks with Gold Road.
“We thought the price offered was too cheap, and at that price, it was a good price to buy at,” Mr Gibbs said. “We’d be willing to look at that particularly with another party, and there has been some inbound interest around that kind of concept. But Gold Fields have said they’re not a seller at that price.”
He said interest had come from north American royalty companies, but declined to go into detail.
The Gruyere mine has never consistently achieved production targets and its performance has been a source of friction between the joint venture partners.
The Gold Road share price plunged on March 19 when it was revealed March quarter production would be lower than the record 91,631 ounces produced in the December period. Mr Gibbs said on Tuesday that Gold Fields management changes had improved the situation at the mine.
Gold Road forecast Gruyere would produce 70,000-73,000 ounces in the three months to March 30 because of maintenance work on the primary crusher and two conveyor belt failures.
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Originally published as Underground twist in miners Gold Road and Gold Fields’ takeover tussle
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