Gold Road Resources hits record high after spurning Gold Fields' bid
Shares of Australia's Gold Road Resources climbed an all-time peak on Tuesday, a day after rebuffing South African miner Gold Fields' $2.1-billion acquisition proposal, deeming it to significantly undervalue the firm.
Gold Road Resources' stock jumped as much as 15.5% to a record high of A$2.830 earlier in the day. It was last trading up 13.9%, as of 01:45 GMT.
The Australian explorer said it had rejected Gold Fields' offer after market hours on Monday, considering it to be "highly opportunistic".
Gold Road shareholders would have received A$3.05 a share under the South African miner's offer.
Gold miners are undergoing a wave of consolidation this year as companies seek to grow their reserves at a time of sky high bullion prices.
"After a bid is rejected, the takeover company usually comes back with a second more lucrative bid," said Jessica Amir, a market analyst at trading platform Moomoo, suggesting that the market has a similar view.
Gold Fields' offer targeted consolidating control over the cost-efficient, long-life Gruyere gold mine in Western Australia, a venture it presently operates in collaboration with Gold Road Resources.
"The offer attributes no value at all to the potential underground expansion of the Gruyere mine," Gold Road said.
A counter offer was tabled by Gold Road for buying out its partner's share in the gold mine but it was rejected by the Johannesburg-based miner.
"The announcement demonstrates the deterioration of the relationship to the point where grievances are now being aired publicly," Jefferies said.
Gold Fields' CEO Mike Fraser said Northern Star Resources' imminent $3.3-billion acquisition of its peer De Grey Mining, which counts Gold Road as its top shareholder, acted as a catalyst for Gold Fields' bid.
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