Northern Star Resources Ltd (ASX: NST) shares are charging higher on Wednesday morning.
The Northern Star share price is currently up 8.12% to $25.18, after closing yesterday at $23.29.
At one stage, the gold miner climbed as high as $25.59, taking its gains over the past week to almost 15%.
There hasn't been a new announcement from Northern Star today.
Instead, investors are reacting to reports that Gold Fields Ltd (NYSE: GFI) could sweeten its takeover proposal after being rejected.
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Gold Fields may come back with more cash
The latest development comes after Northern Star revealed on Monday that it had rejected a $38.7 billion takeover proposal from Gold Fields.
The offer would have given Northern Star shareholders 0.3125 new Gold Fields shares and $7.25 cash for each share they owned.
That valued Northern Star at $27 per share when the proposal was made on 14 September, representing a 22% premium to its previous closing price.
However, around 73% of the consideration was made up of Gold Fields shares.
Northern Star wasn't interested, arguing the proposal materially undervalued the company and would expose shareholders to greater jurisdictional and operational risks.
But Gold Fields doesn't appear ready to walk away.
Bloomberg reports the South African miner is considering increasing the cash component of its proposal as it looks for a way to win over Northern Star's board.
No decision has been made, and there's no guarantee another proposal will arrive.
Still, today's share price reaction suggests investors are betting that the first offer may not be the last.
Why does Gold Fields want Northern Star?
There is a pretty clear reason Gold Fields is interested.
The two miners have significant operations in Western Australia, creating plenty of opportunities to cut costs and make better use of existing infrastructure.
Gold Fields believes a combination could deliver between US$4 billion and US$5 billion in synergies.
The combined company would produce around 4.1 million ounces of gold annually.
That would make it the world's second-largest gold producer behind Newmont Corp (ASX: NEM).
What happens next?
I think the next move from Gold Fields will be worth watching closely.
Northern Star has made it clear that $27 per share, with most of the consideration in Gold Fields shares, isn't enough.
But with Northern Star shares now trading above $25, the gap between the market price and the rejected offer has narrowed considerably.
If Gold Fields wants to get Northern Star's board to the negotiating table, it may need to put more cash and a higher price on the table.
And judging by today's 8% jump, investors seem to think there's a decent chance it will.
