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Johannesburg - Sibanye Gold has made a cash offer for junior rival Wits Gold, which like other smaller operations has struggled in the face of low prices, high costs and labour unrest.
The offer of R11.55 a share is a premium of almost 45% on Wits Gold's closing price on Monday and the takeover target signalled on Wednesday it was ready to accept it.
"Wits Gold considers this premium appropriate," it said in a joint statement with Sibanye, which was created earlier this year in a spin-off of the bulk of Gold Fields' South African mining assets.
Wits Gold said the sector had suffered over the past year from a drop of more than 25% in gold prices, deepening labour tensions in South Africa and wider concerns among investors over the state of the country's mining industry.
"Junior gold miners have not been immune to these concerns... As an exploration and development company without any producing assets, Wits Gold is reliant on investors to fund its development programme and is therefore particularly affected by prevailing market sentiment," it said.
If the sale is completed, Wits Gold will delist from the Johannesburg and Toronto stock exchanges, the companies said.
Junior gold companies are battling to maintain profit margins.
In May, Village Main Reef, one of South Africa's smaller gold producers, said it would shut "non-profitable" operations at its Buffelsfontein mine.
Sibanye has positioned itself as a company with mature assets that can generate solid dividends and aims to produce over 1.4 million ounces of gold this year.
It has signalled it is on the hunt for domestic assets and plans to woo Chinese investors, building on relations its management team has with the Asian giant.
For Sibanye, Wits Gold is attractive because it has assets in development adjacent to its Beatrix operations.
The offer of R11.55 a share is a premium of almost 45% on Wits Gold's closing price on Monday and the takeover target signalled on Wednesday it was ready to accept it.
"Wits Gold considers this premium appropriate," it said in a joint statement with Sibanye, which was created earlier this year in a spin-off of the bulk of Gold Fields' South African mining assets.
Wits Gold said the sector had suffered over the past year from a drop of more than 25% in gold prices, deepening labour tensions in South Africa and wider concerns among investors over the state of the country's mining industry.
"Junior gold miners have not been immune to these concerns... As an exploration and development company without any producing assets, Wits Gold is reliant on investors to fund its development programme and is therefore particularly affected by prevailing market sentiment," it said.
If the sale is completed, Wits Gold will delist from the Johannesburg and Toronto stock exchanges, the companies said.
Junior gold companies are battling to maintain profit margins.
In May, Village Main Reef, one of South Africa's smaller gold producers, said it would shut "non-profitable" operations at its Buffelsfontein mine.
Sibanye has positioned itself as a company with mature assets that can generate solid dividends and aims to produce over 1.4 million ounces of gold this year.
It has signalled it is on the hunt for domestic assets and plans to woo Chinese investors, building on relations its management team has with the Asian giant.
For Sibanye, Wits Gold is attractive because it has assets in development adjacent to its Beatrix operations.
