29 December 2009
AVOCA ANNOUNCES UNCONDITIONAL TAKEOVER OFFER
FOR DIORO VALUED AT $1.25 PER SHARE
Highlights of the Offer
?
ASX 200
mid-tier gold producer, Avoca Resources Ltd (ASX:AVO),
announces an unconditional offer for Dioro Exploration NL (ASX/TSX:DIO) valued
at $1.25 per share1 (?the Offer?).
?
The Offer price is FINAL.
?
Avoca?s Offer to Dioro shareholders will comprise a
cash and scrip component. For each Dioro share held, accepting Dioro
shareholders will receive:
o
$0.65 in cash; and
o
0.325 Avoca shares.
?
Avoca will also offer accelerated payment terms.
Dioro shareholders who accept the Offer will be sent their cash consideration
and be issued with Avoca shares within 3 business days of receipt by Avoca of a
valid acceptance.
?
Avoca?s unconditional offer is superior to Ramelius
Resources Ltd?s (?Ramelius?) last and final offer for a number of reasons,
including that:
o
the implied value of Avoca?s offer represents an 8.2%
premium to the $1.155 implied value of the Ramelius offer (as announced by
Ramelius on 18 December) and a 7.2% premium to the $1.165 implied value of the
Ramelius offer on 24 December 20092;
o
Dioro shareholders will receive a large portion of the
consideration offered for their shares in cash; and
o
it provides Dioro shareholders with exposure to a
substantial Combined Group - having a resource base in excess of 4,000,000
ounces and forecast FY 2010 gold production of approximately 270,000
ounces.
?
Avoca is already the largest shareholder in Dioro with
a relevant interest of 44.85% as well as holding options representing a further
3.2% of Dioro?s issued shares on a diluted basis.
?
The Combined Group will be a leading, growth oriented,
WA-focused gold company with:
o
forecast gold production of approximately 270,000
ounces in FY2010;
o
a resource base in excess of 4,000,000 ounces of gold;
o
low cash operating costs and potential operational
synergies;
o
a strong and highly credentialed Avoca management
team;
o
greater market liquidity and access to capital markets
with strong institutional support; and
o
a strong position in the Australian gold industry for
further growth.
Overview
Avoca Resources Limited ABN
30 097 083 282 (ASX:AVO) (?Avoca?)
announces its intention to make an unconditional off-market takeover
offer (the ?Offer?) for all of the issued shares in Dioro Exploration NL
ABN 31 009 271 532 (ASX/TSX:DIO)
(?Dioro?).
A combination of Avoca and Dioro
(the ?Combined Group?) would3 create a leading ASX
200 Western Australian focused gold producer, which is forecast to produce
approximately 270,000 ounces in FY2010 and which would have a resource base in
excess of 4,000,000 ounces. In addition, the Combined Group would hold a
portfolio of quality exploration targets that are expected to deliver future growth.
Avoca?s
Offer for Dioro
Under the terms of the Offer, for
each Dioro share held, accepting Dioro shareholders will receive:
?
$0.65 in cash; and
?
0.325 Avoca shares.
This values Dioro at $1.25 per
Dioro share1, or approximately $115 million in total, and provides a
significant premium of:
?
34.2% to the 3 month volume weighted average price (?VWAP?) of Dioro
shares on ASX of $0.93 up to and
including 24 December 2009 (the last trading day prior to this announcement);
and
?
15.3% to the 1 month volume weighted average price (?VWAP?) of Dioro
shares on ASX of $1.08 up to and
including 24 December 2009.
In addition, Avoca will offer
Dioro shareholders accelerated payment terms. Dioro shareholders who
accept the Offer will be sent their cash consideration and be issued with
Avoca shares within 3 business days of receipt by Avoca of a valid acceptance4.
The Avoca Offer price set out in
this announcement is FINAL, and will not be increased by Avoca.
Avoca will fund the cash
consideration component of its offer from its cash reserves.
The Ramelius offer is now
FINAL
On 18 December 2009, Ramelius
announced that its offer was a last and final offer. As such, under the
?truth in takeovers? regime, Ramelius cannot now further increase the
value of its offer or extend its offer period beyond Monday 8 February 2010.
Avoca therefore recommends that
Dioro shareholders do not take any action in respect of their Dioro shares
until they receive Avoca?s bidder?s statement. It is anticipated that
Avoca will despatch its Bidder?s Statement to Dioro shareholders in late
January 2010.
Avoca?s offer is superior
to Ramelius? last and final offer for a number of reasons
Avoca?s offer values each Dioro
share at $1.251 which is an 8.2% premium to the $1.155 value implied
by Ramelius? offer on the date it was announced, and a 7.2% premium to the
$1.165 value implied by the Ramelius offer on 24 December 20092.
In addition to the premium over
the Ramelius offer, Avoca believes its offer is clearly superior to Ramelius?
last and final offer because it provides Dioro shareholders with:
?
a large portion of the consideration offered for their shares in cash;
and
?
exposure to a substantial Combined Group with a resource base in excess
of 4,000,000 ounces and forecast FY 2010 gold production of approximately
270,000 ounces.
Avoca
already has a 44.85% relevant interest in Dioro as well as holding options
representing a further 3.2% of Dioro?s issued shares on a diluted basis
Avoca already holds 44.85% of Dioro?s shares as well as 3 million options to
acquire new Dioro shares. The shares issued upon exercise of these
options would represent approximately 3.2% of the expanded issued share capital
of Dioro (based on the current number of Dioro shares on issue and the number
of shares to be issued on exercise of these options), and would increase
Avoca?s current holding in Dioro from 44.85% to 46.60%. The Dioro options
can be exercised into fully paid ordinary Dioro shares at an exercise price of
A$0.64 each. The options expire on
30 June 2011.
Avoca is being advised on this transaction by RBC Capital
Markets and Cochrane Lishman.
Further information about the Offer can be found in
Annexure A of this announcement or by contacting the following people:
Avoca
Resources: Robert
Reynolds 08 9226 0625 / 0410 620 200
RBC
Capital Markets:
Richard Barker 02 9033 3179 / 0419 251 692
Avoca Background
Avoca is an ASX 200 gold mining
and exploration company based in Perth,
Western Australia. Avoca
has grown rapidly since its listing in 2002, and its acquisition of the
Higginsville exploration project in 2004, located 130km south of Kalgoorlie.
Following the discovery of the
Trident underground gold mine at Higginsville in late 2004, and the subsequent
construction of the Higginsville Gold Project which included a new 1 million
tonne per annum CIL treatment facility built on time and under budget; it
poured its first gold bar on 1 July 2008. The time taken from exploration
project acquisition to gold pour was four years. Presently, Trident is Western
Australia?s third largest underground gold mine and has
recently commenced mining the thick and high grade 1005 level, which has
contributed to record gold production levels. Avoca remains confident it
will produce 190,000+ ounces of gold in FY2010 at an operating cash cost of
A$452 per ounce (not including royalties).
Avoca has a highly credentialed
management team with considerable expertise in exploration, project development
and underground mining. Avoca?s managing director, Rohan
Williams, has more than 15 years experience in the region
having worked as a geologist at the +15 million ounce St Ives field immediately
north of Higginsville, and the +6 million ounce Norseman field immediately to
the south.
The Avoca Board is confident that
its management team will continue to expand and develop the existing 1.45
million ounce Higginsville resource base into realising its goal of a +10 year
mine life for Higginsville.
Please Note:
Not for dissemination in the United
States, or over U.S.
newswire services.
The securities being offered have not been, nor will they
be, registered under the United States Securities Act of 1933, as amended, and
may not be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons absent U.S. registration or an applicable exemption
from the U.S. registration requirements. This release does not constitute an
offer of securities in the United
States.
Footnotes:
1. To two decimal places, based on the closing Avoca share
price of $1.845 on 24 December 2009, the last trading day prior to this
announcement.
2. Based on the implied Ramelius offer price of $1.155 as per
Ramelius? ASX release on 18 December 2009, and the implied Ramelius offer price
of $1.165 based on the closing price of Ramelius shares (of $0.555) on 24
December 2009.
3. Assuming Dioro becomes a 100% wholly owned subsidiary of
Avoca.
4. Note that certain foreign shareholders and unmarketable
parcel shareholders will not receive Avoca shares, but rather the net cash
proceeds once those shares are sold on market by a nominee ? further details
will be set out in Avoca?s bidder?s statement.
Annexure
A
Bid Conditions
The Offer will be unconditional.
Bidder?s
Statement and indicative timing
Further information concerning the
Offer will be contained in Avoca?s Bidder?s Statement.
At this stage, Avoca proposes to
serve its Bidder?s Statement on Dioro around mid January 2010 and to despatch
it to Dioro shareholders in late January 20105. The
Corporations Act requires Avoca to send its offers (contained in its Bidder?s
Statement) to Dioro shareholders within two months of the date of this
announcement.
Dioro will also be required to
send Dioro shareholders a Target?s Statement setting out certain information
about the Offer. That Target?s Statement will contain a report from an
independent expert. Dioro shareholders are encouraged to read all
information sent to them by Avoca and Dioro.
Footnotes:
5. This
timetable is indicative only and is subject to change.
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Issued by
Purple
Communications
Level 3, 28
Kings Park Road, WEST PERTH
WA 6005
Ph: 08 6314 6300 Fax: 08 6314 6355
purple@purplecom.com.au