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Mining
Tietto Minerals (ASX:TIE) has revealed no one has accepted a lowball offer for the West African gold miner, which has now been extended to April 5.
If the current situation continues, the line thrown from Chinese gold miner and Tietto shareholder Zhaojin will have been open for almost six months without a bite by the time the fourth extension closes.
The 58c a share offer values Tietto at around $650 million.
But the owner of the 3.8Moz Abujar gold mine in Cote d’Ivoire is already trading at 61c a pop and climbed as high as 83c in December 2022.
That came before some serious ramp up issues for Tietto which opened the door to Zhaojin’s bid.
TIE, which downgraded production forecasts on numerous occasions last year, said in a statement today that the Abujar mine was on track to hit its full production rate in the first half of 2024 after operating at a rate of more than 13,000oz per month (156,000ozpa) in both December and January.
Meanwhile, gold prices have hit a new record of US$2134/oz overnight as reported by the London Bullion Markets Association.
Complicating matters further, Tietto’s largest shareholder Chifeng Jilong Gold initially bought in via a $49.3 million placement at the offer price of 58c back in 2022.
The rising value of gold is yet another stumbling block for Zhaojin, unless it is prepared to raise its offer.
“Since announcement of the Unsolicited Offer, the gold price is up 5% to more than US$2,100/oz, materially higher than the gold prices assumed in the Independent Expert Report, which indicated a valuation range for Tietto of A$0.793 to A$0.927 per share (37% to 60% higher than Zhaojin’s offer price of A$0.58 per share),” Tietto said.
Gold grades lifted from 0.68g/t in June to 0.98g/t in December, with all in sustaining costs of US$1311/oz in the first half of FY24 coming within guidance, Tietto said.
The most recent lift in gold prices came off the back of commentary from Jerome Powell, the US Fed chairman.
He told a House committee in the States that rate cuts were likely this year.
Cue the investor pile-on.
“In prepared testimony to a House panel, Powell said it would be likely to be appropriate for the central bank to cut rates at some point this year,” ANZ’s Madeline Dunk said in a note.
“However, he made it clear we weren’t at that point yet. This case for a rate cut was strengthened by a weaker than expected private jobs report.
“Gold traded as high as US$2,149.25/oz during the session, dragging the rest of the precious metals sector higher.
“The recent rally has been underpinned by a strong surge in investor demand, as the spectre of lower rates has been joined by strong safe haven buying amid elevated geopolitical risks and an uncertain economic backdrop.”
Gold producers were largely on the green side of the ledger, with Northern Star (ASX:NST), Evolution (ASX:EVN) and Perseus (ASX:PRU) among those reporting solid gains.
Ramelius Resources (ASX:RMS) entered a trading halt after reports from the AFR suggested it was planning to spend up to $1 billion to acquire TSX listed gold miner Karora Resources, the owner of the Beta Hunt gold mine and Higginsville mill.
It would be a return of sorts to Ramelius’ origins. A former Kambalda nickel mine, Beta Hunt is famous for its nuggety nature and occasional jewellery box caches of gold specimens.
Most famously the once struggling mine effectively cleared its debt on the discovery of a living room sized cut 500m underground known as the Father’s Day Vein on a September weekend of fortune in 2018.
Unearthed by airlegger Henry Dole, the find yielded $40 million of gold from around 60 cubic metres of dirt including two specimens regarded as among the largest ever found — now on display at the Perth Mint after they were sold to the WA Government. The largest, dubbed the King Henry, weighed in at a whopping 94kg.
Ramelius first made its name at the similarly nuggety Wattle Dam mine near Coolgardie — which up to 2013 produced +275,000oz at an average grade of ~12.5g/t — before launching itself firmly into the mid-tier via the revival of the more predictable Mt Magnet project.
It later acquired the Edna May gold mine near Westonia from Evolution, but economics mean that has a limited life ahead of it.
RMS’ attraction to shiny, high grade WA gold has shone through in recent acquisitions that will likely improve the cost structure of its Mt Magnet operations, notably the takeover of Spectrum Metals and its 18g/t Penny gold mine, as well as last year’s purchase of Cue gold project owner Musgrave Minerals.
Musgrave’s Break of Day deposit contains more than 300,000oz at over 10g/t.
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