Australia’s largest gold producer, Northern Star Resources, has rejected a A$39bn ($27bn) takeover offer from South Africa’s Gold Fields that would have created the world’s second-largest gold miner. The offer, described as "opportunistic, unsolicited and conditional" by Northern Star’s board, was turned down despite Gold Fields being identified by Elliott Management as a potential suitor after the hedge fund called for the company’s sale in June. Shares in Northern Star jumped 9 per cent in Sydney, valuing the company at A$34bn ($23.8bn).

A combined entity would have produced 2.4mn ounces of gold annually from Australia, with nearly 60 per cent of output from Western Australia, and ranked second globally behind Newmont. Northern Star argued the deal materially undervalued its assets and exposed shareholders to jurisdictional and operational risks tied to Gold Fields’ Johannesburg listing. Gold Fields has said it intended to establish a Sydney listing to allow Australian investors to trade its shares.

Analysts noted the two companies collectively own six of Australia’s top-15 gold miners by production, with valuation remaining the key obstacle as Northern Star traded at a higher multiple than its suitor.