JOHANNESBURG (miningweekly.com) – Gold Fields has more than doubled free cash flow in the last 12 months; Northern Star has suffered free cash flow decline in the same period despite the gold price rise.

Gold Fields has a settled leadership team; Northern Star has a CEO, CFO and chief development officer transition underway during a period of project execution and delivery.

In Western Australia, where Gold Fields has a quarter-century experience, the assets of the two companies are close to one another, but the performance of one of Northern Star’s assets is dependent on the extended ramp-up through financial year 2029 and the other is a long-term growth option that Gold Fields can accelerate.

Downstream processing is also key and the reserves of 92% of Northern Star’s Western Australian assets are within 100 km of existing Gold Fields’ processing infrastructure.

By combining the two complementary businesses, $4-billion to $5-billion worth of value is likely to be unlocked.

So, on September 13, Gold Fields submitted a proposal to the Northern Star board to acquire 100% of the ordinary shares in Northern Star by way of a scheme of arrangement that gives Northern Star a third of Gold Fields.

Then on September 26, the Australia Stock Exchange- (ASX-) listed Northern Star informed Gold Fields that it was not appropriate to engage in further discussions.

At the time of going to press, Gold Fields presentation document to be presented at the 2026 Mining Forum in Denver stated that: “There can be no certainty that any further engagements with Northern Star will materialise, or that a transaction will be successfully concluded.”

But Gold Fields is not giving up, owing to the firm conviction that both companies will benefit significantly from the proposed transaction involving Northern Star shareholders owning 33% of the shares of Gold Fields and having a mix-and-match facility to enable them to elect to receive 100% cash or 100% shares.

At the same time, the Johannesburg Stock Exchange-listed Gold Fields would set out to establish a secondary listing on the ASX of the new Gold Fields shares issued to Northern Star shareholders.

This would give rise to output of 4.1-million ounces of gold a year, 80% of it from Australia and the rest from North America, Chile and South Africa. The combined entity would have 77-million ounces and 181-million resource ounces.

The contiguous Western Australian footprint allows access to higher-grade feed and reducing operating costs through lower haulage and processing costs. The combined group would also likely realise procurement, maintenance and tax synergies.

A growth pipeline of 800 000 oz/y is envisaged from value realisation at Hemi, also in Western Australia, Salares Norte in Chile and the advance of Windfall in Canada.

Forming a solid foundation under all this is Gold Fields’ long-life South Deep gold mine in South Africa.

With Gold Fields’ management currently in attendance at Mining Forum Americas, taking place until September 30, Mining Weekly put these questions to Gold Fields CFO Alex Dall and Gold Fields VP investor relations Shilan Modi.

Why do you describe your offer to Northern Star shareholders as compelling?

We believe that this proposed consideration appropriately affects both the quality of their portfolio and the value available through a combination of both businesses, and this proposal gives Northern Star shareholders an attractive premium, as well as 33% ownership of the combined group, which will provide ongoing participation and strategic and financial benefits. We see real substantial value creation opportunities from the combination, with preliminary estimates of $4-billion to $5-billion of operational corporate and portfolio optimisation synergies, and they'll be able to participate on the upside of this.

Northern Star’s assets in Western Australia have been very distinctively highlighted. Give us some justification around that.

There's a particularly strong industrial logic in Western Australia. On this combined portfolio, eight of Australia's top 20 gold mines would be bought together within a 280 km radius, and 92% of Northern Star's Australian reserves, excluding Hemi, are within 100 km of existing Gold Fields processing infrastructure, and this really does create an opportunity to optimise processing, mine planning, haulage, and procurement, and generate corporate and other efficient synergies across the board. In addition, we also think combining Northern Star’s Western Australian expertise with Gold Fields' global technical, operational, and project development capabilities would also support the development. We think the teams are a good fit. We can bring project capability with us.

What gives you confidence that up to $5-billion will be unlocked through synergies. What synergies?

It's a preliminary estimate based on the public information out there, and it encompasses operational, corporate, and portfolio optimisation synergies. A significant opportunity from this does come from the proximity of the Western Australian assets and infrastructure, including opportunities for higher-grade feed, reduced haulage and processing costs, improved utilisation of existing infrastructure. In addition, we also see great supply chain opportunities as we'll be able to buy at scale. There are tax synergies, and then there are the normal corporate and overhead synergies. If you look at the proximity of the assets to each other, there are real operational synergies on that basis.

Explain the advantage Northern Star shareholders have through what you refer to as a mix-and-match facility.

Basically, access to the mix-and-match facility allows shareholders to elect either 100% cash or 100% shares, but it is subject to customary scale-back arrangements as well as the cap. The cap, the total cash consideration, would be capped at $10.4-billion and the number of shares to be issued would be capped at 447-million, so it gives them the choice of being fully exposed to our share price or take all the cash today, which gives them additional flexibility.

Is the ASX listing not an unnecessary expense?

This is intended to enable Australian shareholders to continue to hold and trade their investments with the ASX following implementation, and the combined group would obviously have access to Australian, South African, and US markets.

Pogo mine in Alaska is also included. Tell us about Pogo.

Pogo is a solid asset that's been performing for a while and it delivers well.

Northern Star wants more cash. Why do you see R445-billion as being enough?

We really do believe that the current proposal offers an attractive value to Northern Star shareholders, and it does reflect the significant strategic and financial benefits of the combination. Importantly, we developed this proposal within our disciplined capital allocation framework, and we're going to remain disciplined and prudent in our approach, and really, we’ll be focused on maximising value for Gold Fields shareholders.

A new Northern Star CEO is on the way in. Will you keep all the people or put your own CEO in place?

It's far too early to comment on individual contractual employment arrangements, and no transaction has been agreed.

So, what’s the big takeaway?

This proposal is really consistent with the Gold Fields strategy of improving the quality and value of its portfolio through disciplined investment in high-quality, long-life assets. We believe that Northern Star assets are highly complementary to Gold Fields' existing portfolio, and this combination would create the world's second-largest gold producer.