Shares in the ASX-listed Cardinal Resources surged after the announcement on June 18, which will see Shandong Gold buy 100 percent of the company in an all-cash offer.
The offer from Shandong, at 60 cents per share, beats out a previous offer from Russian firm Nord Gold.
The Chinese mining giant will be paying a premium on Cardinal’s average share price, which was valued at 46 cents per share on June 18.
The board of directors of Cardinal Resources have “unanimously” recommended the shareholders accept the bid.
CEO Archie Koimtsidis said the board negotiated what it believed was a “strong offer for our shareholders” and one which “delivers a significant premium to Cardinal’s market price, at a time of considerable volatility and uncertainty in global markets.”
“I am pleased that Shandong Gold is committed to getting on with development of Namdini to establish the first long-life gold mine in the Upper East Region of Ghana, bringing many significant and long-lasting benefits to the local community and Ghana,” he said in the announcement.
Cardinal has two gold mining projects in Ghana, West Africa.
The bid is subject to approval from the Foreign Investment Review Board, as well as regulatory bodies in China.
The entity buying Cardinal Resources is the Hong Kong-listed Shandong Gold, which is 48 percent owned by Shandong Group based in northeast China.
In turn, the group is controlled by the State-owned Assets Supervision and Administration Commission, a commission tasked with controlling China’s near-100 mammoth sized state-owned enterprises.
State-owned enterprises (SOE) are tied with the ideological needs of the Chinese Communist Party and have been at the forefront of its Belt and Road Initiative.
According to the Chinese Regulation of Party Organisations in SOEs, the enterprises must implement Chinese leader Xi Jinping’s “socialist ideology with Chinese characteristics” and “uphold the party’s leadership and strengthen party building.”
Charles Burton, an associate professor of political science at Brock University, said SOE’s are “actors whose primary mandate is to further the interests of the Chinese strategic and military apparatus.”
“They are designed to realize the overall interests of the Chinese state and are therefore able to draw on all of the resources of the Chinese state, including military intelligence or other resources …” he added.
Federal Member of Parliament, George Christensen told The Epoch Times that China-based companies were bound by the rules of a “brutal regime” meaning “businesses, both state-owned and private, have to dance to its tune.”
Shandong Gold’s proposed takeover of a gold mine in Canada’s north in May is currently under review by the Canadian federal government.
The purchase of gold producing assets is not as heavily scrutinised compared to rare earth minerals given gold is a more widely traded commodity.