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MARKET REPORT: Fiji gold miner glitters again after Chinese firm takes 20% stake in Vatukoula

Vatukoula Gold Mines, an AIM-listed company whose major asset is a gold mine in Fiji, provided dealers with plenty to talk about.

There was a sense of deja vu as its shares rocketed to 14p before closing 4.62p, or 74 per cent higher, at 10.88p after a Chinese oilfield services group took a stake of almost 20 per cent stake at 15p a pop, a substantial premium to the prevailing share price.

SCD Energy, a subsidiary of DRK Energy, has subscribed for 30million shares at 15p, raising £4.5million for Vatukoula. DRK is now entitled to board membership and has agreed to work in conjunction with Vatukoula to source the required debt financing to fund the planned expansion programme of the gold mine.

Solid as a rock: SCD Energy, a subsidiary of DRK Energy, has bought into Vatukoula Gold Mines

WH Ireland has retained its speculative buy recommendation but slashed its target price to 20p from 74p as it recognised the increased risk of further equity dilution.

Vatukoula has flattered to deceive many times before. Back in August 2012 the shares touched 43.6p after it again announced a new heavyweight Chinese investor willing to pay a significant premium to the prevailing price in order to grab a sizeable strategic stake.

Shengen Xintal International Mine Industry Group invested £10.3million for the issue of 20million new shares at 51.65p. It gave it a 17 per cent stake but nothing exciting ever materialised.

  More... SMALL CAP MOVERS: SolGold rises 60% in a week as new boss says it could be worth $1billion thanks to Ecuador mine Market report brought to you in association with Killik & Co. For market advice check out killik.com Share dealing offer for This is Money readers: Cheap flat-fee service for £12.50

Back in April 2009 when it was a penny stock, the Vatukoula board revealed it had received a number of bid approaches, none of which bore any fruit. Four years later and its still a case of jam tomorrow. Not for widows or orphans.

The fabulous Footsie closed 32.57 points higher at 6,755.63, the best since September 2000. Wall Street opened 17 points higher, shrugging off fears that the Federal Reserve could start to pare back its bond buying programme. All eyes will be on Fed chairman Ben Bernanke’s testimony before the Senate tomorrow, which may illuminate the central bank’s plans regarding reducing, or ending, bond purchases.

State-backed Royal Bank of Scotland featured with a further gain of 15.1p at 351.9p. Mike Trippitt, analyst at Numis Securities, upgraded to buy from hold and raised his target price to 410p from 308p. He believes its US franchise to be undervalued.

Vague private equity takeover talk helped utility giant SSE spark 44p higher to a 52-week peak of 1646p. United Utilities, a perennial bid favourite, rose 19.5p to 784.5p. Severn Trent edged up a penny to 2051p as dealers awaited further bid developments. It’s board has rejected a £20 a share bid from a consortium including Borealis Infrastructure and the Kuwait Investment Office but dealers suggest an offer north of £22 a share would have to be tabled before ST’s advisors would give it the time of day.

Buying ahead of today’s capital markets day in London helped GKN accelerate to 314.7p before closing 3.5p better at 309.3p. Oriel is a fan and views the event as a catalyst for the stock’s continued re-rating. Its target price is 350p.

Online grocer Ocado climbed 11p, more or 4 per cent, to 285.1p on further consideration of its 25-year deal with Wm Morrison Supermarkets (2.8p up at 289.3p) which will see it rent out its high-tech warehouse and state-of-the-art delivery systems to Morrisons for an initial £126million.

A Press report suggesting it uses an Irish subsidiary to bill European sales and so avoid higher UK corporation taxes left Marks & Spencer 10.5p down at 440.5p ahead of today’s annual results.

Luxury fashion brand Burberry firmed 7p to 1463p in anticipation of a good set of annual results today. Sales are expected to breach £2billion and pre-tax profits come in around 11 per cent higher at £417million. Simon Wolfson’s Next was sold down to 4587p before closing 18p easier at 4675p. Nomura Code downgraded to neutral from buy.

Shares of the London Stock Exchange rose 27p to 1426p amid reports it is considering acquiring a stake in Istanbul’s fast-growing bourse as part of a deal that could see Turkish trades settled in the City. Borsa Istanbul has apparently been seeking an international partner to overhaul its technology and improve the market’s access to foreign investors.

Events organiser ITE Group added 4.9p at 298.9p after announcing like-for-like revenue was up 10pc in the first-half of the year. The interim dividend is hiked 10 per cent to 2.3p.

Leni Oil & Gas edged up 0.02p to 1.12p on hearing its legal proceeding against Mediterranean Oil & Gas (0.62p easier at 8.38p) concerning the July 2012 sale of its 10pc interest in Malta Area 4PSC to MOG, is now going to trial. Chairman David Lenigas said: ‘The company’s strong view remains it was misled by MOG at the time and we are pleased our claim will now proceed to trial.’

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