Gold Road Resources (ASX:GOR) has rejected a takeover bid from joint venture partner Gold Fields, describing the proposal as opportunistic and materially undervaluing the company.
The non-binding indicative offer, received after market close on 7 March, proposed an acquisition of 100% of Gold Road shares via a scheme of arrangement. The consideration included $2.27 cash per share plus a variable amount based on each shareholder’s indirect interest in De Grey Mining shares held by Gold Road.
The Gold Road board unanimously rejected the proposal on 14 March. The company said the timing of the offer appeared opportunistic, coinciding with reduced production at the Gruyere gold mine due to maintenance issues, including a primary crusher shutdown and conveyor belt failures. These events were disclosed to the ASX on 18 March.
Gold Road said the proposal failed to reflect the potential upside from the Gruyere underground expansion, for which an 18-month drilling program is underway. The board said the offer ascribed no value to that expansion potential.
In response, Gold Road submitted a counterproposal to acquire Gold Fields’ 50% interest in the Gruyere Joint Venture. That counteroffer was rejected by Gold Fields.
Gold Road criticised Gold Fields for disclosing its bid publicly rather than continuing discussions privately. “Gold Road views this behaviour of a joint venture partner, which Gold Road invited into Gruyere in 2017, as extremely disappointing,” the company stated.
Under existing joint venture agreements, Gold Fields is subject to standstill provisions that restrict it from acquiring more than 10% of Gold Road’s shares without prior notification. Gold Road said it has not received any such notification to date.
Gold Road has appointed Gresham Partners as financial adviser and Corrs Chambers Westgarth as legal adviser. Shareholders have been advised to take no action.
Gold Fields currently operates the Gruyere gold mine in Western Australia under the joint venture arrangement, with Gold Road holding a 50% stake.
