The three-cornered contest at this ASX gold junior could become an M&A showdown

Perseus Mining faces fight in potential junior gold M&A deal of the year
Competitive tension at Predictive Discovery and its 5.4Moz Bankan project in Guinea as Lundin Family and Zijin take collective 10% stake
ASX gold miner PRU took major stake last year in West African neighbour

A major investment from a loose consortium of European and Chinese mining giants has blown the door wide open on what could be one of the hottest M&A stories of 2025 and disrupt the growth plans of one of the ASX’s top gold miners.

Perseus Mining (ASX:PRU) emerged as the likely suitor for Predictive Discovery (ASX:PDI) in 2024 as it claimed a 19.9% blocking stake on the register of its West African neighbour.

PRU has become renowned for its cash generation, sitting on over US$700m of cash and gold at the end of the December quarter.

That had Jeff Quartermaine’s miner, which produces 500,000ozpa out of the Yaoure, Sissingue and Edikan mines in Cote d’Ivoire and Ghana, in pole position to eventually buy out the ~$700m capped PDI, a former prospect generator which has seen its shares 30-bag in the past five years after discovering the 5.4Moz Bankan deposit in Guinea.

But the cat has been put among the pigeons. Two far larger predators in the dynastic Lundin Family and US$58bn Zijin Mining have emerged as significant players in the Aussie junior, grabbing 6.5% and 3.5% respectively in a $69m placement at 26.5c a share. PRU has been diluted down to 17.9%, with faceless insto Blackrock at 12%.

“We are delighted to welcome the Lundin Family and Zijin as strategic shareholders in Predictive Discovery,” PDI’s Andrew Pardey said.

“Their investment is testament to the quality of the Bankan Gold Project and the progress PDI is making towards developing it into a tier-1 gold mine. We look forward to working collaboratively with the Lundin Family and Zijin, together with our other shareholders and stakeholders.”

Neither Pardey nor Perseus MD Jeff Quatermaine would comment further. Both are at the Indaba conference in Cape Town, a fertile location for dealmaking machinations to be engineered from all sides.

Canaccord Genuity senior mining analyst Paul Howard, who covers PDI and has a 52c price target on the explorer, says Tuesday’s news brings an M&A exit for one of the world’s best recent gold discoveries closer to reality.

But he warns there’s plenty of water to run under the bridge as the competitive tension grows.

Mexican standoff or 2-vs-1

What is not yet clear is whether Lundin and Zijin, having entered together, will be cooperators in any future bidding or sit against each other on the register.

Howard notes they have form of playing nice in African gold, having both taken big stakes last year in Canada’s Montage Gold, which owns the fully permitted Kone project in Cote d’Ivoire.

“I wonder how much Lundin and Zinjin are a partnership as such, given they’re coming in together, because they’ve got form in this in the past,” he told Stockhead.

“Whether they see this as an investment or the early stages of a takeover remains to be seen and similarly Perseus, I think Jeff Quartermaine and his team (are) very disciplined in their approach to M&A and will pay what they think it’s worth a and perhaps be disciplined in not overpaying for something in their eyes.

“Predictive for Perseus is probably a nice to have and not necessarily a need to have because they’re obviously developing Nyanzaga over in Tanzania.”

While Lundin and Zijin may shake some suitors out of the dataroom, Howard expects other groups are looking closely at Predictive and Bankan as well, with Perseus able to realise a half share of any profits it makes from selling its stake into a rival bid.

“Our price target for this is 52c, so in my eyes there’s certainly a lot of options,” he said.

“I think that corporates out there should be willing to pay 50c for this per share.”

Given its location in the peripheral zone of the Upper Niger National Park, permitting has always been the main cloud settling over PDI’s future. But it recently had an environmental and social impact assessment approved along with a certificate of environmental compliance, opening the door for the filing of its exploitation permit application. A DFS is due in the second half of 2025.

Not without its risk

The project’s location in one of West Africa’s ‘Coup Belt’ states means it is not without its jurisdictional risk.

But Guinea – where Rio Tinto is participating in the world’s largest mining development, the Simandou iron ore project – has, since the 2021 toppling Alpha Conde by a military junta, proven itself more amenable to foreign investment than some of its neighbours.

Nearby Burkina Faso and Mali have emerged as some of the hardest gold jurisdictions for western companies to do business in since their respective coups.

Yet West Africa’s prospectivity continues to have large gold miners looking for M&A opportunities as prices lift above US$2800/oz in a record bull run.

“West Africa is not without its risk, but the reward is there,” Howard said, noting +5Moz discoveries in first world jurisdictions like Western Australia were now few and far between.

“Other than De Grey here in WA (2020) there hasn’t been a large discovery like that of scale since perhaps Gruyere (2013),” he said.

“There’s probably been five or six discoveries of that scale made in Africa in the same time frame.”

Investing moves in cycles as well. Cote d-Ivoire was a no-go zone in 2011 during a civil war but now catches the eye as West Africa’s top gold exploration destination. Guinea “isn’t far behind”, according to Howard.

A number of other ASX and TSX companies have looked to follow PDI’s success.

Asara Resources (ASX:AS1) holds over 900,000oz in the low-grade but oxide-rich Kada gold project in Guinea, and saw its shares jump over 8.5% on Tuesday as investors placed the PDI news in a broader perspective.

Led by former Tietto Minerals boss Matt Wilcox, TSX-V listed Robex Resources is aiming to bring the 140,000ozpa Kiniero mine into production by the end of this year as well. An ASX listing this year has been suggested.

And Siguiri Gold, which originally announced plans to list on the ASX in mid-2024, has a tentative March 7 date for its ASX debut after lodging a fifth supplementary prospectus with regulators. The explorer holds 148km2 across three exploration permits to the south of AngloGold Ashanti’s 200,000ozpa Siguiri mine, near the Mali border.