May 21, 2013

MARKET REPORT: Fiji gold miner glitters again after Chinese firm takes 20% stake in Vatukoula

PUBLISHED: 21:06 GMT, 20 May 2013 | UPDATED: 21:06 GMT, 20 May 2013

Vatukoula Gold Mines, an AIM-listed company whose major asset is a gold mine in Fiji, provided dealers with plenty to talk about.

There was a sense of deja vu as its shares rocketed to 14p before closing 4.62p, or 74 per cent higher, at 10.88p after a Chinese oilfield services group took a stake of almost 20 per cent stake at 15p a pop, a substantial premium to the prevailing share price.

SCD Energy, a subsidiary of DRK Energy, has subscribed for 30million shares at 15p, raising £4.5million for Vatukoula. DRK is now entitled to board membership and has agreed to work in conjunction with Vatukoula to source the required debt financing to fund the planned expansion programme of the gold mine.

WH Ireland has retained its speculative buy recommendation but slashed its target price to 20p from 74p as it recognised the increased risk of further equity dilution.

Vatukoula has flattered to deceive many times before. Back in August 2012 the shares touched 43.6p after it again announced a new heavyweight Chinese investor willing to pay a significant premium to the prevailing price in order to grab a sizeable strategic stake.

Shengen Xintal International Mine Industry Group invested £10.3million for the issue of 20million new shares at 51.65p. It gave it a 17 per cent stake but nothing exciting ever materialised.

Back in April 2009 when it was a penny stock, the Vatukoula board revealed it had received a number of bid approaches, none of which bore any fruit. Four years later and its still a case of jam tomorrow. Not for widows or orphans.

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