Home Market News Mining <!DOCTYPE html> <html lang="en"> <head> <meta charset="UTF-8"> <meta name="viewport" content="width=device-width, initial-scale=1.0"> <title>Saturn Resources’ Big Acquisition: A Bold Move or a Shaky Performance?</title> </head> <body> Saturn Resources’ Big Acquisition: A Bold Move or a Shaky Performance?

Saturn Resources’ Big Acquisition: A Bold Move or a Shaky Performance? Saturn Resources’ Big Acquisition: A Bold Move or a Shaky Performance?

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Saturn Resources, which is part of ETC Holdings, recently made a bold move by acquiring Shanta Gold for a whopping $180 million. The acquisition decision comes amidst a concerning trend where the valuation of publicly listed gold companies has de-rated. Notably, UK listed African gold miners are now trading over 40% lower on a Price to Net Asset Value (P/NAV) basis compared to five years ago. This troubling trend has raised eyebrows and sparked debates across the financial landscape.

A Timely Move Amidst Tumultuous Market Conditions

Saturn Resources firmly believes that the impact on junior gold miners within Shanta’s peer group has been exacerbated by various compounding factors such as lack of diversification, jurisdictional issues, and poor liquidity. In response, the acquisition of Shanta Gold is positioned as an all-cash offer at a premium to the current price, coinciding with a time when the gold price is on the verge of reaching an all-time high. Shanta Gold has expressed that this acquisition provides an exit opportunity in cash for all shareholders, considering the current gold price as well as the operational and other risks inherent in the business.

Resounding Approval and Unanimous Support

Shanta Gold’s directors have voiced their support for the terms of the acquisition, deeming them to be fair and reasonable. They have even indicated their intention to unanimously recommend shareholders to vote in favor of the deal at an upcoming general meeting. This resounding approval from within the company serves as a testament to the potential benefits and opportunities anticipated from this acquisition.

Resilience and Growth Potential

Shanta Gold owns and operates two gold mines in Tanzania — New Luika, the country’s fourth-largest mine, and Singida. Alongside these operational assets, the company also possesses the West Kenya project, which is believed to be among Africa’s highest-grading gold assets. Additionally, Shanta Gold holds exploration properties in both Tanzania and Kenya. This extensive portfolio hints at the resilience and growth potential that Saturn Resources seeks to leverage through this acquisition of Shanta Gold.