The aluminium market is heading into a period where demand growth is expected to outpace supply, Wilsons Advisory says, with one Aussie pure-play producer likely to benefit.

In a research note sent to clients this week, Wilsons said the resources sector in general appears to be returning to growth after a three-year downturn, with the exception of gold, which has been performing strongly through the cycle.

The multi-year downtrend in resources (with the notable exception of gold) has been largely driven by pessimism over China’s growth outlook – particularly weakness in its property sector, which remains central to demand for iron ore. While China’s economy may slow further, investor sentiment seems to be improving, supported by easier monetary policy and rising credit availability.

There were also several global trends, such as the energy transition, growth in data centre builds, and increased defence spending, which were supporting the notion of an upturn in resources generally, Wilsons said.

Aluminium shortfalls loom

On aluminium specifically, Wilsons said the market was likely to be unbalanced in favour of producers, with demand likely to outstrip supply.

After nearly two decades of persistent oversupply driven by China’s substantial capacity additions, this balance has structurally shifted as new supply appears unlikely to match China’s previous additions to keep up with rising consumption.

The demand outlook is being driven by both traditional and emerging drivers, Wilsons said.

Construction, packaging, machinery, electronics, and automotive applications continue to provide a stable base of industrial consumption. On top of this, structural demand drivers are becoming increasingly significant, including the energy transition (electric vehicles, renewables), rising defence spending, growing demand for AI-related infrastructure, and the continued substitution of plastics and copper for aluminium. Together, these factors should support strong and resilient demand for aluminium over the coming years.

Wilsons said supply growth was likely to remain subdued, with smelters needing large amounts of reasonably priced energy to be viable, which was difficult, particularly in markets where data centres were willing to pay more to lock in power supplies.

Therefore, limited future Chinese supply additions, combined with constrained power availability, will restrict supply and push the global cost curve higher over time. Overall, sustained demand growth and limited new supply additions are expected to widen market deficits and drive the cost curve structurally higher, supporting firmer aluminium prices.

Where to invest on the ASX?

Wilsons said from a portfolio perspective, “this backdrop warrants an overweight exposure to aluminium”.

Wilson’s preferred exposure on the Australian share market is Alcoa Corporation (ASX: AAI), “the only pure-play aluminium company listed on the ASX, thereby offering the greatest leverage to aluminium prices”.

Alcoa boasts a high-quality, vertically-integrated portfolio and a proven track record of operational excellence. over the medium to long term.

The post Is it time to buy into aluminium shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The artificial intelligence (AI) race continues to heat up, and the stakes continue to get higher as the hyperscalers announce ever-increasing investments in their infrastructure.

The latest market sentiment centers around how fast these AI giants, like Amazon (NASDAQ: AMZN), Meta Platforms, and Alphabet, can recoup their investments, and whether or not that’s going to lead to an AI bubble.

Amazon made another announcement this week related to its investments in AI. Management had updated investors in the third-quarter earnings call that it would end 2025 with about $125 billion in AI spending, more than any other cloud provider, and that it would accelerate it in 2026. It just announced the first 2026 deal, for $50 billion. Will that help Amazon win the race? 

AWS is the leader in cloud services

Amazon uses AI across its business, but when people talk about this business, it refers to the generative AI it offers clients through the Amazon Web Services (AWS) cloud computing segment. AWS is the largest cloud company in the world, with about 29% of the market, according to Statista.

Although that’s a huge amount of market share, accounting for nearly a third of the total, its largest competitors aren’t too far behind. Microsoft‘s Azure has 20%, and Alphabet’s Google Cloud has 13%, while a sprinkling of other companies have smaller shares.

As the leader in the industry, Amazon has the first-mover’s edge, and it needs to keep investing in this fast-moving space to stay on top. AWS generated $33 billion in revenue in the 2023 third quarter, and it was responsible for 66% of Amazon’s total operating income, with $11.4 billion in the quarter. That’s a 34% operating margin for AWS, and Amazon can invest those profits in growing the business to new levels.

The AWS client list includes the U.S. government

AWS has Top Secret, Secret, and GovCloud segments that can manage classified information for government intelligence and defense departments, as well as related offices. It’s investing $50 billion, starting next year, in expanding its capabilities to service these segments with accelerated supercomputing abilities. It’s adding 1.3 gigawatts of AI and data center capacity, widening access to its AI tools like SageMaker and Bedrock, as well as large language models (LLM) like Claude and Nova.

The increased data capacity can help government agencies collect data and process information faster and more efficiently for improved analysis and more accurate decision-making.

It sounds a lot like Palantir Technologies‘ Gotham and Artificial Intelligence Platform (AIP) programs. Palantir has been one of the hottest stocks on the market, and Amazon may be leaning into trying to get some of its hypergrowth.

Palantir already partners with AWS, and there may be some cross-deals here, although Palantir wasn’t mentioned in the announcement. So while it looks like competition, it could be a mutually beneficial relationship.

Which stocks are poised to win?

Amazon has its finger in many pies, and this is another way to expand its presence and opportunities in a high-growth space. Its AI business has a triple-digit growth rate and is already a multibillion-dollar business.

Defense contracts are usually long term and lucrative, and servicing this market opens more opportunities for Amazon. It’s also a boost for Nvidia, which was mentioned in the announcement, since it provides the base infrastructure for AWS’ most powerful capabilities.

Amazon stock is still trailing the S&P 500 as the year gets closer to its end, and is up only 4%. This could be an excellent time to buy in for long-term investors.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Amazon just made a major AI announcement. Here’s what it means for investors. appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Ranking the best “Magnificent Seven” stocks to buy for 2026. Here’s my No. 5 pick.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is on form again on Wednesday. In early afternoon trade, the benchmark index is up 0.4% to 8,617 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Block Inc (ASX: XYZ)

The Block share price is down 6% to $92.47. This follows a rough session for Block’s shares on the NYSE on Tuesday. This appears to have been driven by a press release, which revealed that it handled over 124 million transactions across its Square, Cash App, and Afterpay platform, during the Black Friday and Cyber Monday shopping weekend. While this is a 10% increase from last year, it seems that some investors were expecting stronger growth.

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price is down 5% to $10.64. This KFC restaurant operator’s shares have come under pressure since the release of its half year results for FY 2026 this week. Although Collins Foods delivered strong profit growth and upgraded its guidance, it wasn’t enough for some investors. This morning, Ord Minnett downgraded its shares to a hold rating with a $10.50 price target. It believes that competition is increasing and suspects the second half could be much tougher.

Perseus Mining Ltd (ASX: PRU)

The Perseus Mining share price is down 3.5% to $5.51. This follows news that the gold miner has tabled an offer to acquire Predictive Discovery Ltd (ASX: PDI). The gold miner has offered 0.136 new Perseus shares per Predictive Discovery share. This valued each Predictive Discovery share at 77.8 cents, which implies a fully diluted valuation of approximately $2.1 billion and represents a premium of 24.5% to its last close price. Management believes that “the transaction enhances Perseus’s portfolio quality and the company’s African gold platform.” It seems that some investors think the miner is overpaying after outbidding a rival.

Robex Resources (ASX: RXR)

The Robex Resources share price is down 13% to $4.67. Investors have been selling this gold miner’s shares after Perseus’ offer ruined its own merger plans with Predictive Discovery. In October, the two Africa-focused miners signed an agreement to merge. At the time, it noted that it “combines two of the potentially largest, lowest cost and most advanced gold projects in West Africa, enhancing scale, access to capital, strategic relevance and competitiveness.”

The post Why Block, Collins Foods, Perseus Mining, and Robex Resources shares are falling today appeared first on The Motley Fool Australia.

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• Why Catapult, Collins Foods, Guzman Y Gomez, and Pantoro shares are falling today

Motley Fool contributor James Mickleboro has positions in Collins Foods. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block. The Motley Fool Australia has recommended Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Zip Co Ltd (ASX: ZIP) shares have delivered explosive growth over the past six months, but the stock has also been marked by volatility. Over the past 52 weeks, the Australian financial technology company’s shares have zig-zagged anywhere between $1.08 and $4.93 a piece, and, with a business model closely tied to high credit risk and volatile consumer spending, unpredictability could well continue in 2026.

I think Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC) are much better tech bets for 2026. Here’s why.

Beaten-down tech shares set to boom

Xero shares are 0.02% higher at the time of writing on Wednesday morning, at $121.46 a piece. Over the past month, the shares are down 18.13% and for the year to date, the stock is 27.51% lower.

Meanwhile, WiseTech shares are 0.65% higher at the time of writing, at $69.90 a piece. Over the past month, the stock has climbed 0.5% but for the year to date, it’s 43.58% lower.

Xero investors reacted unfavourably to the company’s latest FY26 interim results, announced in early November, selling off the stock. Around the same time, WiseTech investors were spooked by news that the company’s Sydney headquarters had been searched by the Australian Federal Police and ASIC. The raid was in relation to alleged insider trading by Richard White and several other staff members.

Meanwhile, the ASX 200 tech sector suffered an overall dramatic sell-off later in the month, particularly of high‑valuation and AI‑linked tech names. The entire tech sector suffered from investor concerns about overheated valuations and an AI bubble. But analysts think tech shares have now been oversold. 

The good news is that this overselling has created a fantastic opportunity to buy Xero and WiseTech shares while they are still cheap.

Why Xero and WiseTech shares, rather than Zip?

While Zip shares have suffered multiple ups and downs over the past year, I’m concerned the pattern could continue over the next 12 months. But Xero and WiseTech are tech companies that could offer the opposite: stable recurring revenue, global exposure, profitability, and scalable software platforms that don’t rely on consumer spending pressure. 

Both companies have previously demonstrated resilience and growth through economic cycles. Both are also well-positioned to benefit from increased interest trends like automation and cloud computing.

What do the experts think?

Analysts are very bullish on these two beaten-down tech stocks. They think the latest price drops present a great buying opportunity for investors.

TradingView data shows that 12 out of 15 analysts have a buy or strong buy rating on Xero shares, and a target price of up to $230.60. That’s a potential 89.5% upside over the next 12 months, at the time of writing. 

It’s a similar story for WiseTech shares, but the growth is expected to be even steeper. Out of 18 analysts, 13 have a buy or strong buy rating, with a maximum target price of $177.57. That implies the shares could storm 151.59% higher!

The post Forget Zip shares: Here’s why Xero and WiseTech are better tech bets for 2026 appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) has been one of the biggest successes in artificial intelligence (AI) over the past five years, as the company’s sales and earnings have skyrocketed due to demand for its AI processors. The increasing need for the company’s semiconductors has fueled the company’s share price rise, pushing Nvidia stock up more than 1,200% over the past five years. 

Spoiler alert: The next five years are unlikely to bring similar results. However, Nvidia and its shareholders are likely to still benefit significantly. Here’s why: 

1. AI semiconductor demand is still very high

Before Nvidia reported its fiscal third-quarter results, investors were on edge. The market had been wondering if all the talk of an AI bubble was true.

It turns out, there’s still plenty of demand for Nvidia’s processors. The company’s data center revenue rose 66% in the quarter to $51.2 billion. What’s more, Nvidia’s non-GAAP (adjusted) earnings per share popped 60% to $1.30, outpacing Wall Street’s consensus estimate of $1.25.

While Nvidia’s strong quarterly results didn’t necessarily disprove that some parts of the AI market are overvalued, it certainly proved that demand for the company’s semiconductors remains very high.

2. More spending is likely on the way

Nvidia’s impressive third-quarter results are, of course, just a snapshot of what’s happening with the company at the moment. However, it’s also likely an indicator of what the company may continue to experience over the next few years.

Nvidia CEO Jensen Huang has said that tech companies will invest $3 trillion to $4 trillion over the next five years as they continue to build out their artificial intelligence infrastructure. And before you write this off as just another optimistic tech CEO pumping up his own company’s opportunity, consider that Alphabet, Meta Platforms, Amazon, and Microsoft are collectively spending $380 billion in capital expenditures (capex) this year. Much of that spending is going to data center investments, and Alphabet’s management has said it will “significantly increase” its spending next year.

Even if Huang’s estimate turns out to be a little optimistic, the tech companies building AI have committed billions of dollars in new spending and could continue to do so for years.

3. A slowdown in spending won’t spell doom for Nvidia

This might be an unpopular opinion, but I don’t think slowing AI spending will be all doom and gloom for Nvidia. Yes, its share price could slide once tech companies scale back their initial AI investments. However, over the long term, I believe Nvidia’s processors will continue to be in demand.

Consider that the company has 90% of the AI data center market for GPUs. The initial surge in building AI data centers with Nvidia’s GPUs is what the company is experiencing now. But over time, tech companies will need to update their data centers and upgrade them with newer, more powerful processors.

This means that Nvidia has a longtail benefit from all of these data centers being built. When spending slows, it doesn’t mean it will dry up completely. And as the leading provider of AI GPUs, Nvidia is likely to remain the go-to choice for future data center upgrades for years to come.

Nvidia is a buy-and-hold stock for the long term

There’s certainly a lot of exuberance in the market for AI stocks right now, and some of it is unwarranted. Numerous AI companies lack impressive sales and are unprofitable, yet they are trading at very frothy valuations.

However, Nvidia is still experiencing significant growth in AI, and companies continue to invest substantial funds to stay competitive in this space. The result of this is that Nvidia stock could continue climbing over the next five years.

Don’t expect the explosive gains from the past few years, but it’s certainly too early to ignore this dominant AI company.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Where will Nvidia be in 5 years? appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

4DMedical Ltd (ASX: 4DX) shares are having a strong session on Wednesday.

At the time of writing, the ASX tech stock is up 18% to $1.96.

Why is this ASX tech stock surging?

Investors have been scrambling to buy the respiratory imaging technology company’s shares following the release of a promising announcement.

According to the release, the company has signed a significant expansion of its distribution agreement with Koninklijke Philips NV (NYSE: PHG) for its FDA-cleared, non-contrast computed tomography (CT) ventilation and perfusion imaging solution, CT:VQ.

Under the expanded agreement, Philips will add CT:VQ to its North American product portfolio, distributing the technology through its established commercial infrastructure and customer relationships.

Philips has agreed to a minimum of approximately A$15 million (US$10 million) in customer orders in 2026 and 2027.

The ASX tech stock also notes that Philips will allocate dedicated sales and clinical specialists carrying CT:VQ sales targets. Joint marketing initiatives and co-branding campaigns are being initiated to drive market awareness and adoption. RSNA (Radiological Society of North America) 2025 will mark the first major international launch event for the collaboration.

What is CT:VQ?

4D Medical describes CT:VQ as the world’s first technology capable of extracting quantitative ventilation-perfusion (VQ) data from routine non-contrast CT scans.

The technology measures regional lung tissue motion and local density changes to generate comprehensive ventilation and perfusion maps without requiring radiotracers or contrast agents.

It notes that the solution addresses several critical limitations of traditional nuclear VQ imaging. By eliminating radiotracers, the technology streamlines scheduling, improves patient access, and removes complex handling requirements, and regulatory constraints. Importantly, CT:VQ integrates seamlessly with existing CT protocols.

There are over one million nuclear VQ scans performed annually in the United States, with an average reimbursement rate of approximately US$1,150 per scan. Management points out that this represents an addressable market of more than US$1.1 billion annually in the U.S., estimated at over US$2.6 billion globally.

And given the clinical and logistical advantages of CT:VQ over traditional nuclear VQ imaging modalities, 4DMedical revealed that it is confident it can rapidly capture a significant part of this market.

Management also anticipates that the introduction of the solution into the market will drive long-term growth in demand for ventilation-perfusion scans beyond the traditional nuclear VQ indications.

Overall, these are exciting times for this ASX tech stock.

The post Why this exciting ASX tech stock is rocketing 18% today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Vulcan Energy Resources Ltd (ASX: VUL) has made a final investment decision on its Lionheart lithium and renewable energy project in Germany, and has announced a $3.9 billion financing package to bring it into production.

The company announced on Wednesday that Phase 1 of the Lionheart project will produce 24,000 tonnes of lithium hydroxide monohydrate per year, sufficient to manufacture approximately 500,000 electric vehicle batteries.

It would also produce about 275 gigawatt hours of renewable energy and 560 gigawatt hours of heat for local consumers per year, over an estimated 30-year project life.

Debt and equity to finance project

Vulcan, which is backed by Australian iron ore magnate Gina Rinehart, said the phase one financing package included $2.1 billion in debt funding from a syndicate of 13 financial institutions, including the European Investment Bank.

The company would also raise $1.1 billion in an equity raising, comprised of a $245 million institutional placement at $4 per share, a $465 million institutional entitlement offer, and a $366 million retail offer open to existing Vulcan shareholders.

The raising is at a deep discount to Vulcan’s trading price at market close yesterday, with the company’s shares finishing at $6.13 on Tuesday.

Vulcan Managing Director Cris Moreno said securing the financing and making the decision to proceed with the project were significant milestones for the company.

A lighthouse project for Europe, Lionheart is set to redefine lithium production, delivering Europe’s first fully domestic and sustainable lithium value chain. It will also provide a clean and reliable source of renewable energy for local communities and industries in Germany’s Upper Rhine Valley.

The project involves stripping the lithium from hot brine sourced from underground, with energy and heat also produced as part of the process.

In addition to securing debt funding from the European Investment Bank, the project has also been supported by Export Finance Australia with $214 million in debt funding, Export Development Canada with $357 million, and the Export and Investment Fund of Denmark with $179 million.

Construction to start imminently

Vulcan said it had entered into the majority of the major project contracts for the construction of Lionheart Phase One and had received all of the major construction permits for the project.

The company said on Wednesday it expected the project to generate an average of €566 million in revenue per year and €427 million in EBITDA.

Vulcan shares were in a trading halt on Wednesday while the capital raising plans were finalised.

Ms Rinehart’s Hancock Prospecting owned a 6.49% stake in Vulcan before the capital raising plans were announced.

The post Gina Rinehart-backed Vulcan Energy Resources pulls trigger on European lithium project appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Northern Star Resources Ltd (ASX: NST) shares are edging lower today.

Shares in the S&P/ASX 200 Index (ASX: XJO) gold stock closed yesterday trading for $27.11. In early morning trade on Wednesday, shares are swapping hands for $26.97 apiece, down 0.5%.

For some context, the ASX 200 is up 0.2% at this same time.

With today’s intraday dip factored in, Northern Star shares have gained 74.6% in 2025, racing ahead of the 4.9% year-to-date gains posted by the benchmark index.

Atop those capital gains, the ASX 200 gold stock also trades on a fully franked 2% trailing dividend yield.

The company’s roaring share price gains this year have been partly driven by the rocketing gold price. Gold is currently trading for US$4,206 per ounce, up 60% since this time last year.

Investors have also been buying the ASX gold miner amid its own operational successes, including its recent acquisition of De Grey Mining, completed in May.

Of course, those gains have come and gone.

Which brings us back to our headline question…

Are Northern Star shares a buy right now?

Red Leaf Securities’ John Athanasiou recently ran his slide rule over the ASX 200 gold miner (courtesy of The Bull).

“This gold miner has solid fundamentals, strong cash flows and a growing project pipeline, but upside is tempered by key risks,” said Athanasiou.

He noted:

Major growth projects, including KCGM (Kalgoorlie Consolidated Gold Mines) mill expansion and the Hemi development are capital intensive with execution uncertainty. Costs are under pressure, and earnings remain exposed to volatile gold prices, which increases uncertainty.

With those risks in mind, Athanasiou isn’t ready to pull the trigger to buy Northern Star shares just yet.

“Until a clearer picture emerges in relation to project delivery and commodity stability, a hold position is prudent,” he concluded.

What’s happening with the ASX 200 gold miner’s growth projects?

Commenting on the projects that are intended to deliver long-term growth for Northern Star shares at the company’s AGM in November, chairman Michael Chaney said:

A major achievement during the year, and one that sets Northern Star up for long term success, was the acquisition of De Grey Mining Ltd and its Hemi Development Project, which is one of the largest existing, undeveloped gold projects in a world-class jurisdiction.

We look forward to bringing Hemi into production over the next few years.

As for KCCM, Chaney noted that despite more challenging geotechnical conditions encountered at the project, “FY25 also saw strong progress on the KCGM Mill Expansion Project on which we expect to begin commissioning in mid calendar year 2026.”

He added, “This will allow us to progressively increase ore throughput from KCGM’s current rate of 13 million tonnes to 27 million tonnes from FY29.”

The post Up 75% this year, are Northern Star shares still a buy today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Predictive Discovery Ltd (ASX: PDI) shares are rocketing on Wednesday morning.

At the time of writing, the ASX 300 gold stock is up 27% to 79.5 cents.

This follows news that a competing takeover offer has been tabled by Perseus Mining Ltd (ASX: PRU).

ASX 300 gold stock rockets on takeover news

This morning, Predictive Discovery revealed that it has received an unsolicited proposal from Perseus Mining.

The gold miner wants to acquire all shares not already owned by it in exchange for 0.136 new Perseus shares per Predictive Discovery share.

Based on the Perseus Mining share price at yesterday’s close, this values each Predictive Discovery share at 77.8 cents. This implies a fully diluted valuation of approximately $2.1 billion and represents a premium of 24.5% to its last close price on 2 December.

The ASX 300 gold stock notes that the proposal is superior to is planned merger with Robex Resources (ASX: RXR), which aimed to creates West Africa’s next mid-tier gold producer. Robex shares are crashing 10% on the news today. Though, Robex has a five business day matching period to table a new proposal.

According to the release, Perseus Mining’s offer will include a $37 million unsecured loan facility to be used for the purposes of paying any termination fee payable under the Robex arrangement agreement.

Perseus believes that the ASX 300 gold stock would be an excellent strategic fit and enhance its portfolio quality and African gold platform. It said:

Perseus’s rationale for the Proposed Transaction is as follows: Excellent strategic fit: as Predictive’s largest shareholder (17.8%), the transaction enhances Perseus’s portfolio quality and the Company’s African gold platform; Proven track record of delivery: Perseus is uniquely placed to de-risk, optimise and ultimately unlock the full potential of Predictive’s Bankan Gold Project (Bankan) in Guinea, with its world class projects team currently executing a similar development at Nyanzaga; Enhanced growth profile: consistent with Perseus’s M&A track record, this transaction is financially compelling and is expected to materially enhance earnings, cash flow and production going forward.

It then adds:

Significant scale & diversification: as one of the largest undeveloped gold projects in Africa, Bankan adds material ounces and mine life across a fifth jurisdiction, with its production of ~249koz1 adding to Perseus’s existing production of 500-600koz per annum2 ; Strong financial position: Bankan and Nyanzaga to be funded via existing liquidity and cashflows with no change to capital management policy; Exploration potential: significant exploration potential in the Siguiri Basin, which can be accelerated and unlocked through Perseus’s proven ability to extend mine life through exploration; and Potential value uplift: potential value uplift post transaction given enhanced scale, asset quality, longevity, jurisdictional diversification and de-risking of development.

The post This ASX 300 gold stock is rocketing 27% amid takeover bidding war appeared first on The Motley Fool Australia.

More reading

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• Why are ASX gold shares and ETFs soaring today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.