Gold Road boss lashes ‘bumbling’ and ‘nonsensical’ Gold Fields in fiery counter to $3.3b Gruyere bear hug

The chief of Gold Road Resources has accused Gold Fields of lying, withholding information about the mine the two companies share, and labelled the South African giant “at best a bumbling joint venture partner”. Gold Fields caught Gold Road off-guard late on Monday by airing out a $3.3 billion takeover offer it tabled for Gold Road earlier this month. The duo are 50/50 joint venture partners in the Gruyere mine in WA’s Goldfields. Gold Fields, which operates Gruyere, publicised the discussions on the inference that Gold Road was not engaging with its offer. “It’s not true that we have not been engaging . . . there’s been many calls and correspondence between board members and executives, as well as two days of in-person meetings,” Gold Road chief Duncan Gibbs told The West Australian on Tuesday. “The stance they’ve adopted is very hostile and aggressive, it’s what they call in investment banking circles a bear-hug strategy.” Mr Gibbs said his biggest gripe with the mining giant’s offer is their “low ball” price, given it comes not long after a production downgrade at Gruyere — an occurrence Mr Gibbs said happens too regularly — and before a much-anticipated underground mining study. “The management of Gruyere has been problematic and there’s been operational issues every year of the joint venture, despite Gruyere being a simple and predictable orebody,” he said. “Gold Fields has been sitting on a draft of the underground mining study since January 24 and there’s been changes made to it that we don’t have line of sight on. “At best you could say they’re a bumbling joint venture partner, and at worst you could say they’re nefarious and not providing information that allows us to understand the full value of our asset.” Gold Road was trading up 14.5 per cent on Tuesday morning to $2.80, still well below Gold Field’s $3.05 per share offer. Gold Road made its own counter-bid to buy Gruyere, which was promptly rejected by Gold Fields — according to Mr Gibbs. “They said they will reject offers for Gruyere at any price, which is nonsensical, they should be acting in the interests of their shareholders,” he said. Beyond Gruyere, Gold Road’s other key asset is its 17.3 per cent stake in De Grey Mining, effectively making it the kingmaker in Northern Star’s proposed $5b acquisition announced late last year. Mr Gibbs is yet to reveal Gold Road’s hand, but the Johannesburg-headquartered Gold Fields on Monday said if Gold Road comes under its control Northern Star would get the critical blessing. A Monday note from analysts at Jefferies determined the announcement “demonstrates the deterioration of the relationship to the point where grievances are now being aired publicly.” The metals and mining desk memo went on to say the research team were “perplexed by Gold Fields’s motivation for publicly attacking its partner” “Our working theory is that Gold Fields is hoping to entice a third party with interests in De Grey to bid for Gold Road, vote down the NST bid for DEG, and sell the stake in Gruyere to Gold Fields. A low probability outcome, in our opinion.” Canaccord Genuity’s Tim McCormack said Gold Fields’ approach was likely designed to “agitate” shareholders that potentially view the deal favourably. “This could see shareholder pressure mount on GOR management to re-engage with GFI to resolve a deal on the terms disclosed,” he said. “Difficult to quantify the outcome here, but it does raise questions around the ongoing state of the JV relationship.”