Perth-based mining firm Cardinal Resources is entertaining a takeover bid by one of China’s largest, state-owned gold mining firms.
The offer from Shandong, at 60 cents per share, beats out a previous offer from Russian firm Nord Gold.
The Chinese mining giant will be paying a premium on Cardinal’s average share price, which was valued at 46 cents per share on June 18.
The board of directors of Cardinal Resources have “unanimously” recommended the shareholders accept the bid.
CEO Archie Koimtsidis said the board negotiated what it believed was a “strong offer for our shareholders” and one which “delivers a significant premium to Cardinal’s market price, at a time of considerable volatility and uncertainty in global markets.”
“I am pleased that Shandong Gold is committed to getting on with development of Namdini to establish the first long-life gold mine in the Upper East Region of Ghana, bringing many significant and long-lasting benefits to the local community and Ghana,” he said in the announcement.
The bid is subject to approval from the Foreign Investment Review Board, as well as regulatory bodies in China.
The entity buying Cardinal Resources is the Hong Kong-listed Shandong Gold, which is 48 percent owned by Shandong Group based in northeast China.
In turn, the group is controlled by the State-owned Assets Supervision and Administration Commission, a commission tasked with controlling China’s near-100 mammoth sized state-owned enterprises.
“They are designed to realize the overall interests of the Chinese state and are therefore able to draw on all of the resources of the Chinese state, including military intelligence or other resources …” he added.
The purchase of gold producing assets is not as heavily scrutinised compared to rare earth minerals given gold is a more widely traded commodity.