PanAust Limited surges 32% but there could be further to run

Takeovers can sometimes create great opportunities for short term gains.

Shareholders in gold, silver and copper miner PanAust Limited (ASX: PNA), have watched their company’s share price rocket 32% today, after a takeover approach from Guangdong Rising Assets Management (GRAM).

The offer has been pitched at $2.30 per share, which is a healthy premium to PanAust’s closing price yesterday of $1.58 and values the miner at around $1.4 billion.

It appears things are heating up in the beaten down mining sector, with fellow gold and copper miner OZ Minerals Limited (ASX: OZL) enjoying a jump in its share price, no doubt in response to renewed interest in the sector. That interest has also seen Boasteel and Aurizon Holdings Ltd (ASX: AZJ)launch a joint takeover proposal for iron ore developer Aquila Resources Limited (ASX: AQA) in recent days.

Because GRAM is a Chinese company, there are certain regulatory hurdles which must be overcome. On top of this, the Chairman of PanAust has written to GRAM advising “that this price remains materially below the level at which the Board would be prepared to recommend a takeover offer to its shareholders.”

With the share price currently trading at $2.08, investors appear to be erring on the side of caution. For enterprising investors, this could create a wonderful opportunity to profit from the discount between the current price and the $2.30 offer price.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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