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Australia’s Gold Road Resources (ASX: GOR) ($2.4 billion) cash takeover from its Gruyere joint venture partner Gold Fields (JSE: GFI), in a friendly deal that consolidates ownership of the Western Australian gold mine.

The agreement follows Gold Road’s rejection of a lower A$3.3 billion offer in late March. Last week, the miner’s managing director Duncan Gibbs signalled potential for renewed talks, telling analysts it was “for Gold Fields to re-engage” if they wished to. Negotiations resumed shortly after, culminating in the weekend’s agreement.

“For us, this represents a strategically logical and low-risk opportunity to enhance Gold Fields’ portfolio through consolidation of the Gruyere mine, which Gold Fields already operates,” Gold Fields chief executive, Mike Fraser, told reporters in Australia on Monday.

“As the Gruyere mine is a producing asset, the company’s cashflow profile is immediately enhanced, and full ownership of Gruyere will enable us to streamline decision making and increase flexibility with respect to its operation and the future development opportunities.”

Once it closes, the deal will make of Gold Road the third ASX 200 gold company to be acquired in 2025, following De Grey Mining’s A$6 billion buyout by Northern Star Resources and Spartan Resources’ pending A$2.4 billion acquisition by Ramelius Resources.

Gold Road board won over

Gold Fields will acquire Gold Road via an Australian scheme of arrangement, offering a fixed cash payment of A$2.52 per share plus variable consideration tied to Gold Road’s indirect stake in Northern Star. This stake arose from Gold Road’s 17.3% holding in De Grey, now converted to Northern Star shares. 

As of Friday, the total offer equated to A$3.40 per share — a 43% premium to Gold Road’s undisturbed closing price on March 21 and 12% above the original bid.

Gold Road plans to declare a fully franked special dividend once the scheme becomes effective, with the amount dependent on its franking account balance. 

Fraser said this would add around A14c per share in additional value, not reflected in the headline offer. He called the deal a “unique liquidity event” for shareholders, offering full value at a premium amid a volatile gold market.

The transaction has secured unanimous support from Gold Road’s board. Institutional investors holding 7.5% of the register have also committed to vote in favour, pending the absence of a superior offer and a positive independent expert’s report. Shareholders will vote on the deal in September, with completion expected in October.

Gruyere, located in the northeastern Goldfields region, was discovered by Gold Road in 2013 and quickly developed into a multimillion-ounce asset. In 2016, Gold Road sold 50% of the project to Gold Fields for A$350 million, retaining a net smelter royalty. The mine began production in mid-2019 and has since produced 1.52 million ounces of gold. Output guidance for 2025 stands at 325,000 to 355,000 ounces.

The March quarter saw lower production —71,226 ounces— due to maintenance issues, down from a record 91,631 ounces in December. Gold Road had dismissed Gold Fields’ initial proposal as opportunistic, as it came just days after this dip and ahead of promising early results on Gruyere’s underground potential.

Fraser acknowledged the underground opportunity but said it was a longer-term consideration. “The increase in the offer price was more about getting the deal done than pricing in the underground,” he said. “Once we made the strategic decision to consolidate the asset, sooner was better than later.”

Growing Australian presence

Gold Fields is increasingly focused on Australia, where it already operates four of its nine global mines — Gruyere, St Ives, Granny Smith and Agnew. In 2024, Australian operations contributed 48% of total production and free cashflow, generating 992,000 ounces and $552 million, respectively. Nearly all of the company’s $72 million exploration spend also went into its Australian portfolio.

“We’re privileged to have such a strong presence in a stable jurisdiction,” Fraser said. “This deal further strengthens that position and reflects our commitment to grow here.”

On future mergers and acquisitions, Fraser said the company continues to evaluate opportunities, though the current focus remains on completing the Gold Road acquisition. He declined to comment on Bellevue Gold (ASX: BGL), which recently received takeover approaches, but did not rule out future moves.

Fraser also confirmed no immediate plans for Gold Fields’ new stake in Northern Star.

Gold Fields will report its March quarter results on Tuesday. Shares opened nearly 2% higher in Johannesburg, while Gold Road surged 9.4% in Sydney to close at A$3.25.