South Africa-based giant Gold Fields has paid $64.3 million to increase its stake in its Gruyere mine partner Gold Road Resources to 10 per cent.

Perth-based Gold Road said the stake of 74.8 million shares was bought from Resource Capital Fund at 86¢ a share, a 27 per cent premium to its closing price of 67¢ on Thursday. 

In the absence of a takeover bid, Gold Fields is prevented from buying any more of Gold Road under the terms of a standstill deal struck last year. 

Gold Fields bought a half-share in Gold Road’s Gruyere project, 200km north-east of Laverton, for $350 million in November. 

The mine is being developed at a cost of more than $500 million and is expected to produce 270,000 ounces a year over an initial life of 13 years. 

RBC Capital Markets Gold Analyst Paul Hissey said the Gold Fields equity acquisition was a vote of confidence in its partner. 

“We believe this investment by Gold Fields is a vote of confidence in Gold Road’s operations, with Gold Fields seeing the exploration potential in current programs throughout the Yamarna belt,” Mr Hissey said. 

“We believe Gold Road presents as an attractive investment, with the company in the passenger seat with a global major developing it's asset, an exciting exploration program in a relatively under explored region and valuation upside, with the stock still trading at a 34 per cent discount to our target price of 90¢.”