Gold Road Resources shares veer off course after potential $1b purchase of Greenstone Gold stake is divulged

Shareholders of Gold Road Resources appear to be anxious the passive owner of the Gruyere gold mine will need to rattle the tin to make a similar acquisition in Canada. The Duncan Gibbs-led Gold Road confirmed media speculation on Monday it was sounding out Orion Resource Partners for its 40 per cent holding in Greenstone Gold Mines. “This participation remains on going and Gold Road has not entered into any definitive acquisition agreements with respect to Greenstone Gold Mines,” Gold Road told the market. “Gold Road continues to evaluate strategic opportunities and will only pursue acquisitions if it is in the best interests of its shareholders.” Greenstone owns a suite of pre-production gold projects in Canada — with an eponymous development as the crown jewel — and it is believed the 40 per cent stake will set Gold Road back at least $1 billion. Shares in Gold Road tumbled 6.6 per cent to $1.70 each by Monday’s close, outstripping the losses experienced by its gold peers, indicating investors are anticipating a capital raising to fund the potential purchase. At the end of 2023 Gold Road had $143.8m in the bank and held $465m of investments, which is predominately comprised of a 19.9 per cent interest in fellow ASX-listed gold peer De Grey Mining. Shares in De Grey also slumped 4.7 per cent, suggesting some corners of the market envisage Gold Road offloading its De Grey holding to stump up the cash. Gold Road’s core asset is a non-operating 50 per cent slice of Gruyere — located 200km east of Laverton — which has been in production since July 2019. The 50/50 joint venture is operated by South Africa’s Gold Fields and this arrangement has grated on Mr Gibbs in recent months. In January, he said mining contractor MACA needed to “step up”, after a weaker-than-expected 2023 production result hammered Gold Road’s shares. “Where we are is basically a MACA personnel problem,” he told analysts at the time. In that same analyst briefing Mr Gibbs also lashed operator Gold Fields for not getting the best out of Gruyere. “I concur with your comment that it (Gruyere) is not delivering to what the orebody should be capable of doing,” Mr Gibbs said. “In terms of Gold Fields, it’s worth highlighting there’s been very significant changes that in the Gold Fields executives over the last 12 months, that includes the corporate level as well as the Australian regional level. “I’m hoping and optimistic that the incoming leadership is gonna drive higher performance than what we’ve been seeing.”