Gold Road Reports 72,980 Ounces at A$2,928 AISC; Acquisition Offer Values Shares at A$3.40
Gold Road Resources has agreed to a $3.40 per share acquisition by Gold Fields, combining fixed and variable cash components tied to Northern Star shares. Meanwhile, Gruyere mine production remains steady, with costs edging higher and strong cash flow underpinning the company’s financial position.
- Gold Fields proposes $3.40/share acquisition including variable Northern Star-linked cash
- Gold Road Board unanimously recommends Scheme pending shareholder and expert approval
- Gruyere mine produced 72,980 ounces at A$2,928/oz AISC in June quarter
- Full-year Gruyere production expected at lower end of guidance; costs at upper end
- Exploration drilling at Gruyere and Gilmour confirms resource continuity and supports underground expansion
Acquisition Agreement Advances
Gold Road Resources has formalised a Scheme Implementation Deed with Gold Fields, under which Gold Fields aims to acquire 100% of Gold Road’s shares. The offer includes a fixed cash payment of A$2.52 per share plus a variable cash component linked to Gold Road’s stake in Northern Star Resources, valued at A$0.88 per share as of early May 2025. This combination values the total consideration at approximately A$3.40 per share, representing a premium of around 40% to Gold Road’s undisturbed share price prior to the announcement.
The Gold Road Board has unanimously recommended the Scheme, subject to shareholder approval and a favorable independent expert report. Board members intend to vote their shares in favor, signaling strong internal confidence in the transaction. A Scheme Booklet is expected to be dispatched to shareholders in late August, with a meeting to approve the deal scheduled for late September.
Gruyere Production and Cost Dynamics
On the operational front, the Gruyere Gold Mine, a 50 – 50 joint venture with Gold Fields, produced 72,980 ounces of gold during the June quarter at an all-in sustaining cost (AISC) of A$2,928 per ounce. This marks a slight increase in costs compared to the previous quarter’s A$2,658 per ounce. Gold Road anticipates full-year production to be at the lower end of its guidance range of 325,000 to 355,000 ounces (162,500 to 177,500 attributable ounces), with costs expected near the upper guidance limit of A$2,400 to A$2,600 per ounce.
Despite the cost uptick, the company reported record average gold sales prices of A$5,131 per ounce and generated strong operating cash flow of A$138.6 million for the quarter. Free cash flow also improved to A$44.7 million, bolstering Gold Road’s cash reserves to A$242.1 million with no debt drawn.
Exploration and Growth Prospects
Exploration drilling programs at Gruyere and the Gilmour deposit continue to deliver results consistent with expectations. The Gruyere diamond drilling program, targeting potential underground expansion, has completed approximately 23,000 metres year to date, with assays confirming mineralisation widths and grades aligned with prior studies. Similarly, drilling at Gilmour is progressing well, supporting resource delineation and potential extensions.
These exploration efforts underpin ongoing underground studies aimed at extending mine life and enhancing resource value. The drilling results and studies are expected to be completed by mid-2026, providing a clearer picture of future growth opportunities.
Financial and Corporate Highlights
Gold Road’s financial position remains robust, supported by strong gold prices and disciplined capital management. The company’s corporate all-in cost, which includes growth capital and exploration expenses, rose to A$3,542 per ounce in the June quarter, reflecting increased investment in development activities. The company also holds significant listed investments valued at approximately A$920.7 million, including a substantial shareholding in Northern Star following the recent acquisition of De Grey Mining Limited.
Looking ahead, Gold Road plans to declare a fully franked special dividend contingent on the Scheme’s effectiveness and the company’s franking account balance. This dividend will reduce the cash consideration payable under the Scheme, adding a layer of complexity to the final shareholder returns.
Bottom Line?
As Gold Road shareholders prepare to vote on the Gold Fields acquisition, the company’s steady production and promising exploration results set the stage for a pivotal chapter in its evolution.
Questions in the middle?
- How will fluctuations in Northern Star’s share price affect the final Scheme consideration?
- What impact will the anticipated special dividend have on net proceeds for shareholders?
- How might ongoing exploration results influence Gold Road’s valuation post-acquisition?