West Africa-focused Tietto Minerals has touted a record month of production at its flagship Abujar gold mine in the Côte d’Ivoire, while rejecting a $650 million takeover offer lobbed by China’s Zhaojin Mining.
In a statement to the Australian Securities Exchange on Friday, West Perth-based Tietto urged shareholders to reject Zhaojin’s offer, labelling the off-market cash bid at 58¢ a share as “opportunistically timed”.
Tietto said the offer put forward on Monday — at a 36 per cent premium to its closing share price last Friday — would be prior to the company’s share price “reflecting the continuously improving performance” of Abujar.
“October 2023 was a record month for gold production at Abujar and was significantly ahead of gold production during September, despite the continuation of the wet season, which has until now prevented the company from milling higher-grade ore and stockpiling the lower grade ore,” Tietto stated.
Tietto’s share price has sunk from 76¢ at the start of the year to 43¢ prior to the takeover offer being launched. Abujar has been plagued by ramp up issues following first gold pour in January.
The Matthew Wilcox-led miner also said the offer from the Chinese gold miner would be highly conditional on obtaining various regulatory approvals.
In response, a Zhaojin spokesman said it has Australian Foreign Investment Review Board approval in place, is well placed to obtain a green light from the Chinese authorities, and has progressed work on obtaining other required approvals.
“We are disappointed that the Tietto board has not seen the value in our cash offer, which represents an attractive premium for shareholders, at a 42 per cent premium to the five-day volume-weighted average price,” the spokesman said.
“We believe the offer provides value and certainty for Tietto shareholders and we will continue discussions with the Board and Tietto shareholders on the merits of our proposal.”
A sweetened offer for Tietto from the Hong Kong-listed Zhaojin may be unlikely, with shares in the bidder dropping 8.5 per cent from when the offer was tabled to Tietto’s rejection.
Zhaojin is already Tietto’s second-biggest shareholder, having built a 7.02 per cent holding since last year.
The group, the biggest producer in China’s Shandong province with 2022 output of 618,453 ounces, has been scouting Australian companies for years, in 2019 hooking up with Liam Twigger’s PCF Capital to look for opportunities.
Tietto’s largest shareholder is a Zhaojin gold mining rival — Chifeng Jilong Gold — with the Shanghai-listed major controlling a 13 per cent stake.
Shares in Tietto were up 6.2 per cent to trade at 60¢ each by the close of trade Friday.