Village Main Reef Ltd. rose the most in two weeks after the South African gold miner said it’s evaluating an unsolicited binding offer of 1 billion rand ($127 million) for its Tau mine from Tannous Investment Group.
The offer amount for the Tau Lekoa mine near Orkney, southwest of Johannesburg, is “well short of the company’s own valuation” and an independent financial adviser will be appointed to evaluate it, Village said today in a statement.
The company expects to complete a business optimization process at Tau later in June though Village won’t sell the gold mine for that amount, Chief Executive Officer Bernard Swanepoel said.
We’re “not sellers” at that level, Swanepoel said today on a conference call. “It’s worth a lot more,” saying the mine will contribute about 600 million rand at a “cash operating level” this year.
Village, which acquired Tau in June 2011 as part of its its purchase of Simmer & Jack Mines Ltd., reduced cash costs at Tau by 5.4 percent a kilogram in the quarter ended March when compared with the previous quarter, the company said.
The shares jumped 7.1 percent, the most since April 24, to 1.67 rand at the 5 p.m. close in Johannesburg, paring their decline this year to 19 percent.
Village also received a non-binding offer of 85 million rand, subject to the completion of a due-diligence study, for its Weltevreden assets that are contiguous to the Tau mine. The board supports the disposal of these assets, the company said.
Marius Saaiman, who was chief executive officer of Simmer & Jack until it was bought by Village, was named joint CEO of Village with Swanepoel. Saaiman was chief financial officer at Village until May 4.