The Shanta Gold Limited (LON: SHG) share price plunged 11.2% after the firm abandoned takeover talks with Shandong Gold Group Co., Ltd and Chaarat Gold Holdings Ltd, which could have led to a potential offer for the company.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
Investors were disappointed by the company’s decision to end the discussions with the two firms interested in acquiring it, which could have seen investors pocket some quick gains on such a deal.
However, Shanta Gold’s board of directors saw it fit to end the takeover discussions saying that it would not accept an offer or deal structure that does not deliver value for shareholders. After discovering high-grade gold deposits at its West Kenya gold project, the company is in a strong negotiating position.
The East-Africa-focused gold exploration and mining company currently produces gold at its New Luika Gold Mine in Tanzania. It is set to deliver its first gold pour at Singida, Tanzania, in Q1 2023, and it expects to hit the 100,000 ounces annual production target next year.
While the company understands the importance of consolidation in the junior gold mining sector, it does not want to sell itself short by accepting an unfair deal.
Eric Zurrin, Shant Gold’s CEO, commented: “After five years, Shanta is a transformed company and unrecognisable to its past as a ‘single asset, single country' producer. In 2017 following a complete overhaul of the business, Shanta transitioned from a heavily indebted company to a profitable dividend-paying business, with debt repaid and an out-of-the-money hedge book extinguished. We developed a viable plan to bring the valuable Singida Gold Mine into production and will complete the execution of that plan shortly. Perhaps most significantly, in 2020, we acquired the West Kenya Project, one of Africa's highest-grading gold deposits, paying a very compelling price. We expanded and upgraded its gold resources through targeted exploration.”
Today’s decline is understandable, as investors were expecting a takeover deal. However, the company’s long-term prospects remain promising.
*This is not investment advice.
Shanta Gold share price.
Shanta Gold shares plunged 11.16% to trade at 9.55p, falling from Friday’s closing price of 10.75p.