[miningmx.com] — GOLD One International continued its share price rally on Tuesday, as commentators believed the purchase of a 17.7% stake in the gold junior by a Chinese consortium might be the first step in a full-scale takeover.
Gold One shares were trading at 370c around noon, up 3.64% since the close of trading on Thursday, representing a near-40% rally since end-March.
Responding to a query on Thursday by the Australian Stock Exchange, where Gold One holds its primary listing, the company said a consortium led by China’s Baiyin Nonferrous Group concluded a deal last week to buy a 17.67% shareholding in a A$75.6m transaction at A$0.53 per share – which at the time represented a 25% premium to Gold One’s Australian trading price.
The seller was Nevada Trading of African Global Capital, an investment fund owned by Mvelaphanda Holdings, Och-Ziff Capital Management as well as Palladino Holdings.
African Global Capital bought a 29.4% stake in Aflease Gold, Gold One’s predecessor, in April 2008.
As it did on March 30 when the ASX also queried Gold One on significant share price and volume movements, the company didn’t rule out the possibility of a takeover.
“Gold One is currently assessing a potential acquisition transaction, and also a potential change of control transaction for the company which, if it were to proceed, could involve an offer to Gold One shareholders to acquire all of their shares on terms and conditions yet to be determined,’ the response read.
“At this stage, as was the case on March 30 2011, no binding arrangements have been entered into in relation to the potential transactions referred to above, and the company can give no assurance that any transaction will eventuate from those currently under contemplation.’
Gold One reported a strong performance for the March quarter last week. While profitability never was a key concern – shallow-level mining at its flagship Modder East mine makes Gold One one of the lowest cash cost producers in the industry – analysts repeatedly said Gold One should meet production targets before a rerating of its shares could follow.
It increased gold output to 26,188 ounces against guidance of 25,000oz, and said it was on track to meet its second-quarter target of 28,000oz.
Gold One has often been criticised for missing targets. Its 2010 target had been revised several times, down from an original 100,000oz to 85,000oz in May following a five-week strike at Modder East. The company eventually achieved output of 66,445oz for the year, after further production ramp-up delays at Modder East.
The share, which closed at A$0.50 on Thursday, is now trading above levels targeted by major brokerages in the first quarter.
Investec Securities gave Gold One a target price of A$0.45 in a note dated March 18, while the UK’s Ambrian Partners envisaged A$0.47 for the share.
