Ann: Takeover - extension of offer period, page-30

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cherryburn

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173

07/01/24

00:27

Post #: 71759344
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Originally posted by leec: ↑

why would you?
that’s the question anyone should ask themselves in acceptance of the Zhaojin offer.
1. Firstly the offer is non binding. You accept and Zhaojin basically controls your shares until Tie accepts it, which could mean many months (noting the offer has Ben extended twice);
2. Based on the above what is the likelih4. ptrodood the share price increases? Since the offer the sp has stubbornly stayed above the offer price (not a vote of confidence);
3. The company’s main asset is (as expected) moving to full production, which albeit lumpy has held near 11,000 ounces a mont
4. Production is likely to increase, though mill downtime could lead to a reduction over December, we have no indication that January production will be bad. In fact Zhaojin who has a seat on the board and would be privy to this information has extended their bid;
5. The offer is conditional on Chinese govt approval. This is a big risk. Most companies seeking this have seen delay or scupering of such applications such as amp and Akp.
6. Zhaojin made their offer in an environment where gold prices were anchored at 1930-2000 dollars per ounce. Since the bid gold prices have stayed btw 2000-2080 per ounce, nearly 5% higher. Most analysts concede the gold price in 2024 state an average gold price averaging at 2150 per ounce in 2024, a 5-10% increase on an assumption made by Zhaojin. On that alone the offer should be increased to 65c at a minimum.
7. Finally shorts have decreased from over 70 million shares to 10 million shares. They are gamblers and would not cover at Prices above the offer unless they believed the share price was likely to fall or the Zhaojin offer was likely to suceed.
Conclusion: hold, and I continue to accumulate.
gltah

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Looking at the lovely 18 page letter from Jiang Guipeng of Zhaojin Capital on 18 December, it is worth noting the following under 1.3 Independent Expert's valuation..."The Independent Expert's sensitivity analysis indicates that a 10% reduction in the assumed future gold price would lower its own valuation of Tietto by over 20%." Of course a 10% increase in the assumed future gold price would raise the valuation by at least 20%. The high-end valuation per Tietto share is quoted at A$0.927 based on a gold price of $1950 for 2024 and $1927 for 2025. Bank of America forecast $2200 for the end of 2024 and Macquarie Group expect gold to reach $2100 during 2024. It does not take a genius to work out that the 58c currently being offered is ludicrous but if Zhaojin want to keep paying millions of dollars to lawyers acting for them so be it !

TIE Price at posting: 60.0¢ Sentiment: Buy Disclosure: Held
9 Upvote

3 Great analysis

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