The acquisition of a 17.7 percent stake in Gold One...

The acquisition of a 17.7 percent stake in Gold One International (GDO) by a Chinese consortium on Thursday may be a prelude to a takeover of the Australian and African gold producer.

"It could be their first step," Gold One CEO Neal Froneman told I-Net Bridge/BusinessLIVE.

"I really can't comment at this stage," Froneman added.

At the end of March, Gold One, in a response to an Australian Stock Exchange query on the run in the company's share price, noted that it was currently assessing "a potential change of control transaction for the company, which, if it were to proceed, could involve an offer to Gold One shareholders to acquire all their shares".

According to a notice informing the markets of a change in substantial shareholding, Gold One said a consortium led by Baiyin Precious Metals Investment had agreed to acquire close to 142.7 million shares in its company from Navada Trading.

With the consortium paying AUS$75.6 million or about R544.9-million cash for the stake, the shares were bought at AUS$0.53 or R3.82 each.

The company's share price was trading at AUS$0.32 a share in mid-March, just before shooting up 34 percent to AUS$0.43 on March 16, and has since climbed to AUS$0.50, where it was trading by mid-morning on Thursday.

Froneman said the price the consortium paid for the shares shows the value seen in the company.

"I have for a long time said the company is undervalued relative to its peers," said Froneman, adding that the company had clearly turned a corner.

Gold One this week reported an excellent start to the year by posting a 22 percent increase in its March quarter gold production to 26 188 ounces.

The increased production output is a result of increases in volume and grade from Modder East.

Recovered grades increased to 6.55 grams per tonne, resulting in a 29 percent increase in gold production from Modder East to 26 023 ounces in the three months ending in March.

Group gold revenue at US$35.42-million was 21 percent higher than the previous quarter due to the increased output and a slightly higher gold price of US$1384 an ounce received.

Cash costs for the quarter remained steady at US$472 an ounce despite the strong rand-dollar exchange rate.

The company remains on track to hit the full-year guidance production of 120 000 ounces.

At 10.30am shares in Gold One were trading 4.23 percent higher at R3.45 on the JSE.

The stock has climbed 15 percent or 45 cents this month to date.