Capricorn Metals, Emerald Resources feature in gold mining consolidation talks

An autonomous haul truck at Capricorn Metals' Karlawinda gold mine.

Any discussions that may have been taking place about a deal between Gold Road Resources and Regis Resources are understood to have ended.

But there are suggestions that, quietly in the background, the $2.2bn Emerald Resources and the $2bn Capricorn Metals have both run the ruler over Gold Road.

The attraction of Gold Road to the Morgan Hart-run Emerald and Mark Clark-controlled Capricorn is not only its 17.3 per cent stake in the much sought after De Grey Mining – which is ramping up production of its Hemi gold development, 85km from Port Hedland – but that it holds half of the high-quality Gruyere gold mine in Western Australia.

Gold Road does not operate Gruyere, which is one of Australia’s highest quality gold mines. But DataRoom understands that suitors like Emerald and Capricorn have been doing some detective work behind the scenes to determine whether Gold Fields may be prepared to give up its right to operate Gruyere, which is where the value is seen to be.

South Africa’s Gold Fields has made it clear it is not a seller of operational rights and is highly committed to the Australian market – so the suitors are thought to have moved on for now.

At Diggers and Dealers in Kalgoorlie this week Regis Resources boss Jim Beyer would not comment whether Regis and Gold Road had held talks, but one theory is that the deal terms were not right and Regis is now looking elsewhere.

Suggestions are that Gold Road was keen for any merger deal to result in chairman and chief executive – Tim Netscher and Duncan Gibbs respectively – remain at the helm, and Mr Beyer, a seasoned campaigner, would be happy to move on if the deal were right.

But with respect to Emerald and Capricorn, if the talks did in fact take place, as some have suggested, it shows that top industry players are taking the need for consolidation seriously to gain investor attention.

While consolidation in the industry has been said to be pressing, it’s always been the personalities which have stood in the way in the top ranks.

The share price of Emerald Resources has been a strong performer based on expectations of its projects in locations such as Cambodia, and it’s not inconceivable that Mr Hart would want to take advantage of that uplift through a deal.

The value of Gold Road for both Mr Clark and Mr Hart of Gold Road is getting to operate Gruyere because they are both highly skilled operators.

One other miner to watch is Northern Star, which may be interested in De Grey Mining once it has the processing plant of its Super Pit gold mining asset running smoothly.

Gold Fields chief executive Michael Fraser told journalists he had not had direct approaches from parties wanting to buy its stake in Gruyere or right to operate the mine.

Meanwhile, De Grey Mining boss Glenn Jardine said the company did not have anything to disclose regarding approaches, following speculation Agnico Eagle may have weighed a bid for the $2.7bn gold miner.

However, the company is moving forward with development of Hemi, and while some believe now could be the right time to buy the business to influence the way that the mine was developed, others say that any suitor would be best to wait to launch a buyout proposal until the project had ramped up and allow De Grey to take much of the risk.