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JOHANNESBURG (miningweekly.com) – The share price of Aim-listed ASA Resources rose more than 45% on Wednesday morning, after it announced that investment company Rich Pro Investments (RPI) has made an offer to acquire the company.
RPI, which is owned by Chinese copper processing firm and nonferrous metals trader Hailiang, has offered to acquire the issued share capital of ASA at 2.1p a share, valuing ASA’s share capital at about £35.5-million.
RPI believes the transaction offers ASA shareholders a premium of 64.7% on the closing price of 1.275p a share on July 11; a 30% premium to the volume-weighted average price of 1.62p a share from January 1 to July 11; and a 43.9% premium to the volume weighted average price of 1.46p a share for the 12 months to July 11.
Further, RPI believes the offer is compelling in light of a number of risks and uncertainties facing ASA, including a material level of outstanding borrowings and creditors that require repayment or refinancing in the near future and a material decrease in net cash in recent years.
In addition, it said there were several uncertainties in terms of the longevity of certain of ASA’s mining licences, while ASA was also exposed to legal disputes, accounting uncertainties and foreign exchange restrictions.
RPI also noted that ASA’s management structure needed to be stabilised and strengthened.
ASA, which has mining operations in Zimbabwe and South Africa and exploration projects in the Democratic Republic of Congo, Angola, Ghana and Botswana, has recommended that its shareholders not take action at this stage, as it intends to continue discussions with RPI to seek assurances from RPI about its intentions for ASA.
ASA in April removed its then CEO Yat Hoi Ning and FD Yim Kwan over alleged financial irregularities.
This follows after an investigation initiated by the board, which found that funds “amounting to several million dollars” had allegedly been transferred from the accounts of its 85%-owned Freda Rebecca gold mine (FRGM) to entities in China, without full value being received by FRGM.
ASA later revealed that some $4.3-million had been unaccounted for, with $2.7-million related to the 2016 financial year and $1.6-million to the 2017 financial year.