Monsters of Rock: Zhaojin sharpens the knives for continued assault on Tietto

Chinese goldie Zhaojin Capital has taken a stab at ASX-listed African gold miner Tietto Minerals (ASX:TIE) after it continued to snub a 58c-a-share offer despite a production downgrade.

Tietto used a supplementary target’s statement this month to reveal it had knocked down guidance at its stuttering Abujar mine in Cote d’Ivoire from 75,000-85,000oz to 65,000-75,000oz for the second half of 2023.

Having produced 57,000oz from July 1 to November 30, the blame was placed on a mismatch between mining and milling rates and a 10% reduction in milling days in December thanks to a decision to bring a 3.5 day shutdown forward from 2024.

The mine had initially been forecast to produce as much as 120,000oz for the second half back in July.

The ball for now appears to be in the court of Tietto’s board, despite the underperformance of Abujar, where they say full production will come next year as mining rates improve.

Major shareholders Chifeng Jilong Gold Mining Co. and Kongwell Management Ltd, together boasting 18.74% of TIE’s shares have said they don’t intend to accept the bid, which values Tietto at around $655 million.

It’s currently trading at 62c at a market cap of $700 million, above the offer price.

But Zhaojin launched a first supplementary bidder’s statement today, putting forward a case for why shareholders should sell out more than 30% below January’s all time highs (though at a premium to the 43c shares were fetching before the bid).

They blame the production downgrades at Abujar for Tietto’s share price decline prior to their takeover bid. Zhaojin also questioned valuation comparisons and gold price assumptions used in an independent expert’s report that deemed the offer neither fair nor reasonable and placed a fair value of 79-93c on Tietto’s stock – 39-59% above the offer price.

“For instance, they include large, multi-asset gold companies with a long track record of production, such as B2Gold, IAMGOLD, Endeavour and AngloGold Ashanti, which are very different and not directly comparable to single-asset, early-stage producers like Tietto,” Zhaojin said.

“Similarly, the inclusion of a transaction involving a large multi-asset gold company like Randgold skews the results.”

Tietto is yet to respond, but it looks like there is plenty of sparring to come yet.

Tietto Minerals (ASX:TIE) share price today

Lithium miners continue recovery

Over on the bourse today the materials sector carved out an even 0% day. May as well have slept.

That is except for investors in the major lithium stocks, who are all continuing their rebound from recent lows.

Money is seemingly punting on a low in spodumene prices, which have fallen well over three quarters in 2023.

Having fetched over US$8000/t on the spot market late last year (admittedly, lightly traded in the lithium industry where long term contracts between miner and converter are the norm), 6% Li2O lithium concentrate is now going for US$1100/t according to Fastmarkets.

There’s still a little margin at those prices for Australian producers, though it’s getting tighter, with reports some higher cost Chinese producers are being squeezed out by margin pressure.

Could we see a rebound? The punters certainly hope so. Allkem (ASX:AKE) hit a month high of $10.65 ahead of a vote on a merger with America’s Livent tomorrow, while Pilbara Minerals (ASX:PLS) and Mineral Resources (ASX:MIN) reported similar milestones.

Evolution Mining (ASX:EVN) also rose upwards of 1% after announcing the completion of its ~$600 million acquisition to pick up 80% of the Northparkes copper mine in New South Wales.