The board of directors of Tietto Minerals has recommended its shareholders to reject the A$629m ($404.94m) buyout proposal received from Zhaojin Capital, a fully-owned subsidiary of Zhaojin Mining Industry.
According to the board of the gold producer in West Africa, the takeover bid materially undervalues the company.
The company also said that the unsolicited offer is highly conditional and has been opportunistically timed by Zhaojin Mining.
Tietto Minerals said that the bid was made before the share price reflected the performance of the company’s Abujar gold project located in Cote d’Ivoire following its first production earlier this year.
Besides, the proposal was made prior to the company finalising the definitive feasibility study on its potential second mine 11km to the south of the Abujar gold mine.
Tietto Minerals received the non-binding indicative proposal from Zhaojin Mining earlier this week.
Zhaojin Mining already owns a 7.02% stake in the Australia-based Tietto Minerals.
Under the terms of the proposal, Zhaojin Mining offered A$0.58 per share to acquire the remaining stake in Tietto Minerals.
The consideration represented a 36% premium to Tietto Minerals’ last closing price and a premium of 42% to Tietto Minerals’ five-day VWAP as of 27 October 2023.
Through the acquisition of the gold production and smelting company, Zhaojin Mining aimed to expand its business overseas as well as enhance the overall profitability of its operations.
Zhaojin Mining also intended to support and expedite the growth of Tietto Minerals including, the development of the Abujar gold mine and continued exploration in Côte d’Ivoire, Liberia, and other regions, upon the completion of the proposed deal.
Tietto Minerals achieved commercial production at the Abujar mine in July 2023.
