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GOLD Fields’ A$39bn ($27bn) approach for Northern Star Resources has revived an awkward question for Australia: why a country with its mining pedigree has never produced a gold miner to rival Newmont, Barrick or Agnico Eagle, said the Financial Times.
Northern Star, Australia’s largest gold producer, rejected the offer two weeks ago, saying it undervalued the company’s growth prospects. It was valued at A$44bn earlier this year, before production warnings and senior departures dented investor confidence. Activist fund Elliott Management has since urged it to talk to the South African group.
Jake Klein, chair of Evolution Mining, told the Financial Times that losing Northern Star to a foreign buyer would be “another missed opportunity for Australia’s gold mining industry”.
“We grow companies very well, but we have not yet been able to take them to the next level,” he said. Australia had “all the ingredients to be the global epicentre for mining”, yet “for whatever reason, to date we have fallen short”.
The FT said former domestic leaders Newcrest and Normandy were bought by foreign groups, while BHP and other majors moved towards iron ore and copper. Executives say Australian investors have been wary of gold miners expanding into riskier regions such as Africa and the Pacific.
In Denver, Gold Fields CEO Mike Fraser called the deal “a very compelling story”, pointing to about $5bn in synergies around Kalgoorlie, where both companies operate. A merger would create the world’s second-largest gold producer after Newmont.
Morningstar’s Jon Mills put the chance of a higher offer at 50%, according to the FT.