South African gold mining giant eyes acquisition of Australian company valued at R360.29 billion

Gold Fields has expressed interest in acquiring Northern Star Resources, according to people with knowledge of the matter.

This could mark a blockbuster deal that would deepen the miner’s bet on Australia’s prolific deposits of the metal.

Gold Fields recently approached Northern Star about a transaction, the people said, asking not to be identified because the information is private.

Australia’s biggest gold miner rebuffed the overtures, and Gold Fields has been considering its next steps, according to the people. 

Shares of Northern Star have fallen 17% in Sydney trading this year, giving the company a market value of AU$31.5 billion (R360.29 billion).

Johannesburg-listed Gold Fields has declined about 9% during the same period, for a market capitalisation of $35.7 billion. 

A representative for Gold Fields declined to comment, while Northern Star didn’t immediately respond to queries outside regular business hours.

A multiyear rally in gold prices has driven a wave of dealmaking in the industry, with Gold Fields among the most acquisitive.

Takeovers of Gold Road Resources and Osisko Mining over the past two years have strengthened its global footprint, giving it full operational control of assets spanning Africa, Australia, and the Americas.

Surging bullion prices have also heaped pressure on miners to maximise returns on their portfolios.

Several producers are considering spinoffs and asset sales after a series of cost blowouts and operational setbacks that have plagued the sector in recent years.

Northern Star, based in a suburb of Perth, Western Australia, appointed a new chief executive officer in July amid pressure from activist investor Elliott Investment Management.

This year, the hedge fund has criticised Northern Star’s underperformance and called for it to consider a sale or asset divestments.

Elliott has also been pushing for an overhaul of the company’s board. 

In June, Northern Star Chairman Michael Chaney wrote in a letter to shareholders that the company had been approached by several suitors about combinations over the last year, but said it was not the right time to sell.

Northern Star has cut its production guidance several times over the past year, with issues at its Kalgoorlie processing plant in Western Australia constraining output and weighing on its performance relative to peers.