Tietto Minerals receives off-market takeover proposal from Zhaojin Capital
West Africa’s newest gold producer Tietto Minerals (ASX: TIE) has received a conditional and non-binding off-market takeover offer from Zhaojin Capital, which is a wholly-owned subsidiary of Zhaojin Mining Industry Company.
Zhaojin proposes to acquire all of the shares in Tietto that it does not already own for a cash consideration of $0.58 per share.
The group is currently Tietto’s second largest shareholder, with a 7.02% holding.
The offer is conditional upon a 50.1% minimum acceptance from Tietto shareholders.
It will require approval from Chinese regulators as well as the Ministry of Mines, Petroleum and Energy of Côte d’Ivoire, where Tietto’s flagship Abujar gold operation is located.
A successful takeover by Zhaojin would result in a delisting of Tietto from the Australian Stock Exchange.
No certainty
Tietto said there was no certainty that Zhaojin’s indicative offer would convert to a binding proposal that its board would be willing to recommend to shareholders.
The company has appointed Barrenjoey and Corrs Chambers Westgarth as financial and legal advisers to help with the process.
The board is expected to consider the proposal and provide Tietto shareholders with advice in due course.
Tietto confirmed its shareholders do not need to take any action at this stage.
Special purpose vehicle
Zhaojin Capital is a special purpose vehicle incorporated in Hong Kong by Zhaojin Mining Industry for the purposes of the Tietto offer.
Zhaojin Mining Industry was incorporated in 2006 in the People’s Republic of China and is an integrated gold corporation with exploration, mining, processing and smelting operations.
It has a track record of investing in the gold mining industry, with principal products including standard Au9999 and Au9995 gold bullion.
The majority shareholder of Zhaojin Mining Industry is Zhaojin Group, which is a Chinese mining and industrial chain company founded in 1974.
Approximately 90% of its shareholding is held by the Zhaoyuan Municipal Government of Shandong Province.
In the event the takeover is approved, Zhaojin Mining Industry said it would support and accelerate the growth of Tietto and the Abujar gold mine.
Gold production
Tietto reported 33,750 ounces of gold production from Abujar for the three months to end September, following a June tally of 15,592 oz.
While production ramped up in July and August, it dipped to 10,962 oz gold in September, which was lower than forecast as heavy rains impacted scheduled mining volumes, reduced total mill feed and prevented Tietto from establishing stockpiles.
Mining rates are expected to increase progressively in the current quarter once the dry season starts and the company employs additional excavators and mobile equipment.
Processing performance improved during the period as Tietto began feeding through fresh rock from Abujar, while grade also improved as depleted oxide material was sent through the mill.