Shanta Gold Ltd (AIM:SHG, OTC:SAAGF) is recommending a cash takeover bid from Tanzania-based group Saturn Resources, which is part of ETC Holdings.
The offer is worth 13.5p per share and values the East Africa-based gold miner at £142 million.
Ketan Patel, a director of both ETC and Shanta Gold, said a poor valuation for Shanta and gold miners generally, a lack of liquidity in the miner’s shares and other geopolitical risks had prompted the offer.
Current pressures on Shanta's operating market are to persist for the near term, he added.
“Given the significant technical, financial, regulatory and geopolitical risks, our objective is also to provide liquidity to shareholders to realise their investment for cash at an appropriate premium to the current market value," he said.
Tony Durrant, Shanta’s chairman, said the independent directors have confidence in the miner’s strategy with two mines in operation and "an exciting project in West Kenya".
ETC’s offer, however, is all cash and comes at a time when the gold price is at an all-time high, Durrant said in an explanation of the board's recommendation.
The offer is at a 6% premium to the close yesterday.
Shanta Gold rejected two takeover offers in October 2022 because they did not value the group highly enough.
ETC is an investing company within the larger ETG Group that is owned by the Patel family.
The offer has been structured as a scheme of arrangement, which means it needs 75% acceptance to go ahead.
If the bid is successful, Shanta will delist from AIM, said ETC, which added acceptances and agreements to accept currently amount to around 16.5% of the shares in issue.