Northern Star revealed on Monday that on Friday it had rejected an unsolicited $38.7 billion offer from Johannesburg-based Gold Fields, describing it as an "opportunistic" attempt to get its assets on the cheap.
News of the takeover offer sent Northern Star's shares surging, however, suggesting that investors don't believe the story is over.
Both companies have significant operations in Western Australia's Eastern Goldfields region and Gold Fields chief executive Mike Fraser said a merger would result in cost savings of around $US4 billion to $US5 billion ($5.7 billion to $7.1 billion).
"We see this combination as creating a stronger platform that can deliver value sooner," Mr Fraser said.
Gold Fields was disappointed that Northern Star's board hadn't chosen to engage on its proposal, but his company remained open to "constructive dialogue" and would continue to seek engagement with Northern Star's board, Mr Fraser said.
The owner of the famed Super Pit goldmine, a major tourist attraction in Kalgoorlie, Western Australia, Northern Star has suffered a series of operational setbacks in 2026.
The offer was "highly opportunistic" because it came ahead of several near-term value catalysts for the miner, including the ramp-up of a new processing plant at the Super Pit and the arrival of a new chief executive, Northern Star's board said.
Gold Fields was asking Northern Star shareholders to accept nearly three-quarters of its massive offer in Gold Fields stock, which Northern Star said carried a "meaningfully higher jurisdictional risk profile".
Johannesburg-based Gold Fields has assets across Australia, South Africa, Ghana, Peru, Chile and Canada, while Northern Star owns goldmines in WA and Alaska.
It is also developing the huge Hemi deposit in the Pilbara that it acquired during its $5 billion takeover of De Grey Mining last year.
"Gold Fields has sought to acquire one of the world's premier gold portfolios at a price that falls well short of what the board considers to be its fundamental value and at a highly opportunistic time," Northern Star chairman Michael Chaney said on Monday.
The potential target's share price has fallen significantly from its peak above $30 in March after a number of events.
It cut production forecasts, first in January and then in March, after equipment failures and maintenance bottlenecks at the pit.
It also faced productivity issues at its other WA assets.
Chief executive Stuart Tonkin stepped down at the end of August, and former Glencore executive Suresh Vadnagra will take over on October 5.
RBC Capital Markets analyst James Redfern said the Gold Fields offer implied a $27-per-share valuation for Northern Star, and a 22 per cent premium to its price at the time of the offer.
The miner's share price closed Monday at $24.70, up 6.2 per cent from Friday but still slightly in the red for the year.
Gold Fields' offer involves paying each Northern Star shareholder $7.25 in cash and 0.3125 in Gold Fields scrip, which would leave them collectively owning about a third of a combined company.
Gold Fields said in its statement that there was no certainty any further engagements with Northern Star would materialise or that a transaction would be successfully concluded.
