South African mining company Gold Fields has approached Northern Star Resources about a possible takeover, in a move that could bring Australia’s biggest gold miner under new ownership.
Northern Star rejected the initial approach, according to people familiar with the matter, and Gold Fields is considering its next steps. Both companies have declined to provide substantive comment, with a Gold Fields representative saying the company would not comment and Northern Star not responding to enquiries outside regular business hours.
Northern Star, which is based in Perth, has a market value of about A$31.5 billion after its shares fell 17 per cent in Sydney this year. Gold Fields, listed in Johannesburg, has declined by about 9 per cent over the same period and is valued at approximately US$35.7 billion.
The approach comes after a sustained rise in gold prices prompted increased dealmaking across the mining industry. Gold Fields has expanded through acquisitions including Western Australian producer Gold Road Resources and Canada’s Osisko Mining over the past two years, giving it full operational control of assets in Africa, Australia and the Americas.
Northern Star has faced pressure from activist investor Elliott Investment Management, which has criticised the company’s performance and urged it to consider a sale or disposals of assets. Elliott has also called for changes to the company’s board.
The miner appointed a new chief executive in July and has reduced its production guidance several times in the past year. Problems at its Kalgoorlie processing plant in Western Australia have constrained output and affected its performance compared with peers.
In a letter to shareholders in June, Northern Star chairman Michael Chaney said the company had received approaches from several potential partners about combinations during the previous year. He said it was “not the right time to sell”.
