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Mining
Gold has been on a tear as of late, punching through record highs in spite of jobs data in the US that suggests interest rate rises could be delayed.
Converging on US$2400/oz late last week before a pullback, the market will be on edge when it reopens in the northern hemisphere this afternoon after Iran directed a – largely intercepted – missile attack on Israel.
It’s the strongest indication yet a conflict centred around Gaza and Israel’s punishing response to the October 7 attacks, could extend outside of Palestine.
Safe haven demand and strong central bank buying – notably from China – has sent prices to new levels since.
With bullion fetching around $3600/oz, margins will be strong for ASX-listed gold miners and their international counterparts.
No wonder they want more of the stuff.
Two big M&A stories today.
Firstly, Gold Road Resources (ASX:GOR) has emerged as a frontrunner in the race to acquire a 40% stake in the Greenstone gold mines operation in Ontario, Canada, according to The Australian’s Dataroom column.
That has been shopped for a while by Orion, a noted mining investor and financier, which has the smaller of the two JV stakes alongside Equinox Gold.
Greenstone is planning to produce first gold this half, based off a (Canadian) reserve of ~5.54Moz at 1.27g/t.
Its technical report from 2021 suggests the mine will produce 366,000ozpa over a 13.7 year life.
Gold Road is yet to operate its own mine, but holds 50% of the Gruyere JV in partnership with South African giant Gold Fields and boasts a 19.9% stake in Hemi gold project developer De Grey mining (ASX:DEG).
Its shares tumbled some 6.7% after Gold Road appeared to confirm the report in The Oz, because investors are gun shy and sceptical about nearly all forms of M&A.
A final hail mary in Zhaojin’s bid to take over all of Tietto Minerals (ASX:TIE), having thus far moved no one with a 58c per share offer.
The new bid has been pitched at 68c a share, a 17% lift and 67% premium to Tietto’s pre-bid price on October 27.
It came after serious teething issues at the miner’s Abujar gold deposit in Cote d’Ivoire, which saw its value collapse through the middle of 2023.
Tietto shares were up 1.54% as of 4pm AEDT to 66c, the bid valuing the company at around $768m.
And Zhaojin has issued the words ‘best and final’.
The offer has now received Aussie and Chinese investment approval. Those conditions have been waived now, with Zhaojin saying it does not believe Ivorian approval is required.
“We have engaged with a range of Tietto shareholders, and clearly seen that they would prefer an offer that is not subject to the key regulatory approval conditions, which we have now achieved,” a spokesperson for Zhaojin said.
“This has allowed us to come back to Tietto shareholders with a significantly increased best and final Offer price of A$0.68 per Tietto share, which is 17% higher than the initial Offer price.
“We expect the increased best and final Offer price will be highly compelling to Tietto shareholders and look forward to engaging with them further on the strengths of our Offer.”
The deal remains subject to a minimum acceptance condition of 50.1%.
Will it be enough to sway TIE’s board? The company issued a take no action notice today.
But it was quick to point out experts at Grant Thornton had put a 79-93c valuation range on the stock back in November, and gold prices have absolutely exploded since then.
Piedmont Lithium (ASX:PLL) (lithium) +39%
Alumina Ltd (ASX:AWC) (alumina) +6%
South32 (ASX:S32) (diversified) +4.6%
Nickel Industries (ASX:NIC) (nickel) +4.1%
Gold Road Resources (ASX:GOR) (gold) -6.6%
Energy Resources of Australia (ASX:ERA) (uranium) -5.4%
De Grey Mining (ASX:DEG) (gold) -4.7%
Genesis Minerals (ASX:GMD) (gold) -4.5%
The materials sector was up 0.35% today, powered by iron ore and diversified players, with mega cap Rio Tinto (ASX:RIO) up over 3.5%.
In broader market news Gina Rinehart’s Hancock Prospecting kicked off a long awaiting drilling program searching for Goldfields lithium in the Mt Bevan joint venture with Indian backed Legacy Iron Ore (ASX:LCY) and Hawthorn Resources (ASX:HAW).
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