Will investors benefit from a Chaarat / Shanta Gold tie-up?
“..But I do think that bulking up and adding size will make Chaarat more interesting, and we’ll also create the platform for doing other more interesting deals in the future…”
It’s less important as to how the media was made aware of takeover interest in Shanta Gold and more about why the East Africa-focused gold producer is possibly up for sale, who might buy it and for how much?
Chaarat Gold was outed as one of the interested parties and its chief executive Mike Fraser explained that Chaarat is on the hunt for additional production ounces, not because his company is lacking output, but because he is pursuing his mandate which is tangible value accretion.
“Whilst we have a very attractive internal growth pipeline, what we do have to do is add productive ounces into the portfolio and and grow quicker than probably we could do with our own internal development options. And in addition to that, we should also look at some kind of geographical diversification.”
Chaarat is accustomed to ‘exotic’ locations. It has assets in Kyrgyzstan and Armenia while Shanta’s portfolio encompasses Tanzania and Kenya.
When asked what an enlarged group would look like Fraser is pragmatic. He is confident Chaarat can bring credible technical support into the development of Shanta’s assets which includes the Luika Gold Mine and the Singida Gold Project. In many respects there is a synchronicity in the timelines and ambitions both companies are pursuing in terms of the exploration, development and production of their licenses and respective cash generating assets.
“There’s definitely a high correlation to relative value and relative rating depending on size. I wouldn’t chase ounces for the sake of ounces alone. They need to be quality ounces. They need to be ounces that will deliver value in the long run to shareholders. But I do think that bulking up and adding size will make us more interesting, and we’ll also create the platform for doing other more interesting deals in the future.”
The timetable for interested parties to make firm offers is a matter of weeks with one rival playing their ‘cash only’ cards already.
If Chaarat doesn’t get Shanta, Fraser tells Sarah Lowther the board has been “looking at a lot of things” which underlines his commitment to expansion and consolidation in the junior mining space, a commitment most probably mirrored by the board at Shanta Gold.
Watch the 2022 documentary on Shanta Gold.
Join COO Darin Cooper and interim CFO David Mackenzie discuss Chaarat’s H1 2022 results on the Investor Meet platform
Watch Mike talk to Mining Journal’s Tom Hoskins about the headway being made at Kyzyltash
Follow the company on Twitter @ChaaratG
The author was remunerated but does not hold shares in the company