Zhaojin Capital’s bid for Tietto Minerals could be the start of more interest in Australian-listed West African gold miners, which are considered substantially undervalued compared to their Australian peers due to the high risk jurisdictions in which they operate.
The Chinese suitor, which already owns 7.02 per cent of
the company, has put forward a 58c a share takeover bid, valuing the group at about $654m, and with an existing stake in the business it’s unlikely to attract a rival offer.
But it may throw the spotlight on the sector, which is generating strong cashflow from operations, as miners there produce more gold per ounce than Australian miners.
The gold price is currently just under $US2000 an ounce and global instability may push demand up further.
Among other miners operating in West Africa are West African Resources and Perseus Mining.
Some believe it could be Russian and Chinese suitors that wade into the sector.
Tietto is working with Barrenjoey and Corrs.
The share price of Perseus Mining is down 5 per cent this year, while West African Resources is down 35 per cent.
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