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Tietto board knocks back $649m African gold takeover from China\u2019s Zhaojin<\/strong> \u00a0<\/p>\n Tietto Minerals (ASX:TIE) <\/a>has pulled the O word out in its defence of a raid from Chinese shareholder Zhaojin Mining, calling a ~$649 million bid from the Hong Kong listed gold miner opportunistic.<\/p>\n A unanimous rejection of Zhaojin\u2019s 58c per share offer for the West African gold miner came as it trotted out its October production numbers for its Abujar gold mine in Cote d\u2019Ivoire.<\/p>\n The miner knocked down its H2 2023 guidance from 105,000-120,000oz to 75,000-85,000oz at AISC of US$1175-1350\/oz at the start of January. But it delivered 33,753oz at 0.95g\/t and 95% recoveries in the September quarter, more than double the 15,592oz produced in the June term.<\/p>\n In October, it delivered 12,057oz at a 1g\/t grade and 94.8% recovery, an annualised rate of around 140,000ozpa. Tietto intends to produce at an average rate of around 170,000ozpa between 2024 and 2032.<\/p>\n Zhaojin owns around 7% of TIE, but isn\u2019t the largest holder on the register. Fellow Chinese gold stock Chifeng owns ~13%, having entered in a placement last year, big enough to block a full takeover if it didn\u2019t want to support it.<\/p>\n Given its entry price last year was 58c there would appear little motivation for it to sell out to the Zhaojin offer.<\/p>\n TIE\u2019s board said the Zhaojin offer \u201cmaterially undervalues the company\u201d, saying the timing was opportunistic because Tietto\u2019s share price should improve as the performance of Abujar improves. It also has a DFS on a second mine 11km south of Abujar due early next year.<\/p>\n \u201cOctober 2023 was a record month for gold production at Abujar and was significantly ahead of gold production during September despite the continuation of the wet season, which has until now prevented the company from milling higher grade ore and stockpiling the lower grade ore,\u201d Tietto said.<\/p>\n \u201cMining rates are expected to substantially exceed milling rates over the next eight months as we move into the dry season in Cote d\u2019Ivoire. This will provide the company with significant flexibility to optimise for free cash generation as ore stockpiles are developed.\u201d<\/p>\n Tietto hit an all-time high of 86c earlier this year before the slog began at Abujar. Its shares rose 6.2% to 60c today, lifting its market cap to ~$671m.<\/p>\n \u00a0<\/p>\n Tietto also raised questions over whether Zhaojin, which mined around 620,000oz of gold and smelted and processed another 260,000oz from third parties last year, would get Chinese outbound investment approvals.<\/p>\n \u201cThe Offer is subject to a number of defeating conditions, including the receipt of regulatory approvals from a number of Chinese regulatory authorities (including the NDRC, MOFCOM and SAFE) as well as from the Ministry of Mines, Petroleum and Energy of Cote d\u2019Ivoire,\u201d Tietto said.<\/p>\n \u201cThere can be no certainty as to whether these regulator approvals will be forthcoming or how long it may take to obtain such approvals.\u201d<\/p>\n Zhaojin has already obtained Aussie FIRB approval for the takeover, and rebutted suggestions it would struggle to get a Chinese outbound investment tick.<\/p>\n \u201cWe are disappointed that the Tietto Board has not seen the value in our cash offer, which represents an attractive premium for shareholders, at a 42% premium to the five-day VWAP,\u201d a Zhaojin Mining Industry spokeperson said.<\/p>\n \u201cWe believe the offer provides value and certainty for Tietto shareholders and we will continue discussions with the Board and Tietto shareholders on the merits of our proposal.<\/p>\n \u201cWe have Australian FIRB approval in place and have progressed work on obtaining other required approvals and believe we are well placed to obtain all required Chinese regulatory approvals.\u201d<\/p>\n \u00a0<\/p>\n The battery metals complex charged like a raging bull, with a sea of green among lithium, graphite and rare earths stocks playeing the starring role.<\/p>\n But there are few doubts the collective of metals needed to fuel the EV revolution are struggling to keep their momentum going, as seen in the struggles of big lithium miners to maintain their margins.<\/a><\/p>\n ANZ\u2019s commodity strategists Daniel Hynes and Soni Kumari said in a note this week that Chinese battery output, pushing 1000GWh this year, is now far exceeding domestic battery demand.<\/p>\n \u201cAfter record growth last year, expectations were high for the EV market 2023. Aided by attractive government policies, China subsequently experienced a huge build-out in battery capacity. However, in a rush to make the most of the EV boom, supply has ultimately outweighed demand by two to one,\u201d they say.<\/p>\n \u201cThis came as consumer demand suffered amid high inflation and an uncertain economic backdrop. While still strong, EV sales growth has subsequently been in decline. This has seen battery makers cut output and reduce their battery metal inventories.<\/p>\n \u201cMetals such as lithium, cobalt and nickel look likely to remain oversupplied in the short term. This is likely to keep prices depressed. Nevertheless, we still see a strong long-term outlook. Supply still needs to increase by 1.5\u20133.5 times over the next five years, a goal not easily achieved.<\/p>\n \u201cA period of sustained weakness in battery metal prices could ultimately make the decarbonisation of the transport sector even harder.\u201d<\/p>\n Pic: ANZ Research<\/p>\n They say the honeymoon period for the EV market \u201cappears to be over\u201d, noting that western OEMs have been scaling back production plans amid losses and bottlenecks in their EV divisions, with EVs now taking longer to sell than petrol cars.<\/p>\n \u201cEV sales are growing, however. They topped 300,000 units in the US for the first time in the third quarter, according to a Cox Automotive report,\u201d Hynes and Kumari said. \u201cThey rose 14.3% in September in the European Union and 22% in China, the world\u2019s largest EV market.\u201d<\/p>\n They anticipate oversupply will put downward pressure on lithium, nickel and cobalt prices, but note the long-term outlook remains strong, with EVs to reach 30% of all new car sales from 2025.<\/p>\n \u00a0<\/p>\n <\/span>\u00a0 The post Monsters of Rock: Tietto board flips bird at \u2018opportunistic\u2019 Chinese takeover bid; and a rude awakening for battery metals<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\nANZ says oversupply of battery production capacity will hurt battery metals, threatening energy transition<\/strong><\/p>\nChinese regulatory roadblock looms?<\/h2>\n
Are EV metals facing growing pains?<\/h2>\n
Monstars share prices today<\/h2>\n\n
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