Alto shares surge on takeover offer

Junior gold explorer Alto Metals has received an off-market takeover bid from Chinese-owned Goldsea Australia Mining in an all-cash deal worth $20.7 million.

Alto shares surged on the news, rising 72 per cent to 6.2 cents per share at 2:20pm AEDT.

Goldsea Australia, wholly owned by China-based Shandong Goldsea Group, announced its offer on Friday afternoon to acquire Alto Metals for 6.5 cents per Alto share.

Goldsea currently operates three underground mines in China.

Alto's sole project is the Sandstone gold project in Western Australia, covering 80 per cent of the Sandstone Goldfield.

Last month, Alto increased the mineral resource estimate at Sandstone to 5.4 million tonnes at 1.7 grams per tonne of gold, for 290,000 ounces.

Alto today advised shareholders should wait for the board’s formal recommendation before taking action on the offer.

The company has appointed Longreach Capital as financial adviser to the offer and HWL Ebsworth Lawyers as legal adviser.

Alto said it was considering its response to Goldsea and noted the offer was subject to a number of conditions, including approval from both the foreign investment review board and at least 90 per cent of its shareholders.

Goldsea says the offer does not require Chinese government approval.

In March last year, Alto also received a takeover bid from Middle Island, which had offered five of its shares for every Alto share, valuing the company at $9.4 million.

Alto spent several months responding to the offer before it expired in November.