South African miner Gold Fields said it remained open to talks over a takeover of Australia’s Northern Star Resources after the target rejected an unsolicited offer valued at A$38.7 billion. Perth-based Northern Star said it received and rejected the bid in mid-September, calling it opportunistic and inadequate for assets in Western Australia and Alaska.
Gold Fields CEO Mike Fraser said the proposal deserved further consideration and would create a stronger combined company, which he believes could deliver value to both shareholder groups sooner. His comments fueled speculation of a revised offer. Bloomberg, citing unnamed sources, reported that Gold Fields was considering increasing the cash component.
The initial terms offered 0.3125 new Gold Fields shares and A$7.25 in cash for each Northern Star share. The bid valued Northern Star at A$38.7 billion, a 22% premium to the companies’ share prices on the last trading day before the offer. Northern Star chair Michael Chaney said the price fell short of the board’s assessment of the portfolio’s fundamental value and growth prospects, while exposing investors to unfamiliar jurisdictional and operating risks.
Speaking at an industry conference in Denver, Fraser said the combined group would become the world’s second-largest gold producer behind US-based Newmont. He also cited an opportunity to consolidate Western Australian assets into a second-largest global mining hub producing 2.4 million ounces a year. Fraser said coordinating ore between mines and mills could cut transport and processing costs.
Both miners operate several Western Australian sites near Kalgoorlie, where Northern Star owns and runs the Super Pit. Activist investor Elliott Investment Management has pressed Northern Star’s board for sweeping changes, including considering a sale or asset divestments. Geopolitical tension, inflation concerns and central-bank buying have helped support investor interest in gold and may encourage further deals in the sector.