Saturn Resources has agreed to buy Shanta Gold, a mining company registered in Guernsey with a focus on East African operations, for £141.95m ($180.7m).
Shanta’s shares were bought at a 6.7% premium above their Tuesday closing price of 12.65p, meaning Shanta shareholders will be entitled to receive 13.5p per share. The company said that shareholders will also be entitled to an interim dividend of up to 0.15p a share.
Saturn Resources said this was a good time to make the acquisition as the valuation of many publicly listed gold companies has de-rated, with UK-listed African gold miners trading 40% lower on a price to net asset value (P/NAV) than they were five years ago. The P/NAV ratio is an indicator of how much investors are prepared to pay per one net asset.
The company believes that Shanta’s performance has been limited by jurisdictional issues, a lack of diversification and poor liquidity.
In a statement, Shanta Gold said: “This is an all-cash offer at a premium to the current price when the gold price is close to an all-time high. As such it provides an exit opportunity in cash for all shareholders, taking into account the current gold price as well as the operational and other risks inherent in the business.”
Shanta’s directors said that they intend to recommend that shareholders vote unanimously in favour of the deal at an upcoming meeting. The company owns and operates two gold mines in Tanzania, at New Luika and Singida.
According to Mining Technology’sparent company, GlobalData, Tanzania was the world’s 22nd-largest producer of gold in 2022, with output down by 8.11% on 2021. From 2016 to 2021, production from Tanzania decreased by a 3.6% compound annual growth rate (CAGR) but is expected to rise again by a CAGR of 0.5% between 2022 and 2026.
