The West

Talk suggests Papillon in play

Papillon Resources has sparked takeover speculation that should boost interest in Australian-listed West African gold stocks after the Perth company yesterday called a halt to share trading ahead of announcing a "potential corporate transaction".

While Papillon gave no other details of the transaction, and executives remained tight-lipped yesterday, it is understood the company is the target of a bid rather than being the acquirer.

Analysts listed a host of potential suitors including African Barrick Gold, B2Gold and Endeavour Resources.

The Ian Middlemas-chaired Papillon has been quietly talking itself up as a potential takeover target over the past six months.

Mr Middlemas is believed to have made it widely known the company's deal-focused board would be likely to take a favourable view of any offer that approached $2 a share, putting a value of $685 million on Papillon. Its shares last traded at $1.425.

At stake is Papillon's 5.2 million ounce Fekola project in Mali, widely seen as one of the best undeveloped gold assets in the region. Papillon launched a definitive feasibility study on Fekola in March and this month said it had started site works.

If Papillon is taken over, it would be the third sale or merger of a West African gold project in as many years for Papillon managing director Mark Connelly.

It would also be another notch on the belt of Mr Middlemas, a prolific dealmaker best known for shepherding Tanzanian uranium play Mantra Resources into a billion dollar takeover by Russian nuclear agency Rosatom.

Mr Connelly led Adamus Resources into a $US600 million ($645 million) friendly tie-up with Canada's Endeavour in 2011 and remained with Endeavour until its $390 million takeover of Avion Gold almost a year later.

Endeavor is seen as one of the potential suitors for Papillon, and recently hinted it may again be looking to grow by last week upping its stake in Mali-focused Legend Gold.

Other potential suitors include Randgold, a neighbour of Papillon in Mali; African Barrick, with former Intrepid Mines boss Brad Gordon in charge and said to be looking to give the company a shake up; and B2Gold, back on the acquisition trail after swallowing CGA Mining last year. One source tipped Independence Group as an outside runner, with new managing director Peter Bradford coming fresh from a West Africa merger between PMI Gold and Asanko Gold.

The West Australian

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