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20 July 2009
Avoca
extends Offer period due to questionable Dioro tactics
As you may be
aware, Dioro Exploration NL (Dioro) has announced a trading halt pending
release of a reserves increase for the Frog’s Leg gold project, owned 49%
by Dioro.
The trading halt,
which was announced on Friday afternoon, is required to be lifted on or before
Tuesday 21 July 2009, the same day that the offer by Avoca Resources Limited (Avoca)
(ASX:AVO) for all Dioro shares had
been scheduled to close.
In Avoca’s
view, Dioro’s trading halt:
may be an attempt by Dioro to discourage
acceptances under Avoca’s offer; and
is unnecessary because Dioro, in its Target’s
Statement released to the ASX on 28 May 2009, has already disclosed to the
market an increased Frog’s Leg reserve of 489,745 ounces.
In its report
(which has now been the subject of three requests for clarification by ASIC),
Dioro’s Independent Expert, KPMG, used a reserve figure of 489,745
ounces for Frog’s Leg in calculating Dioro’s valuation multiple
per reserve ounce[i].
In other words, Avoca
does not believe that Dioro’s increase in reserves is new information (as
it has already been disclosed by Dioro in KPMG’s report), and therefore
it does not justify Dioro going into trading halt, particularly at this late
stage of Avoca’s offer.
In order to enable
Dioro shareholders to digest the information still to be released by Dioro, and
to have an opportunity to accept Avoca’s offer, Avoca has today extended
the Offer period under its unconditional takeover offer by one week,
so that it is now scheduled to close at 5.00pm (Perth time) on Tuesday 28 July
2009.
In light of Avoca’s
bid, Avoca requests that Dioro’s board immediately update Dioro
shareholders to allow Avoca’s offer to occur in an efficient, competitive
and informed market. In particular, Avoca notes the continuing references
by the Dioro board, since mid April when the Avoca bid was announced, of
discussions with third parties. The Dioro Board should now provide Dioro
shareholders with a frank and complete report on the status of such discussions
and an indication whether any of them are likely to result in a competing
preferable offer.
In the absence of a
competing offer, the choice for the Dioro shareholder is to accept the Avoca
offer or to allow the Dioro board and management to continue in their attempt
to deliver value out of the Dioro assets. The performance of the Dioro
board and management has clearly failed to deliver the value required by the
shareholders, and in fact they have overseen significant value destruction for
Dioro shareholders over the past 12 months as evidenced by the operational
failures which resulted in a substantial fall in the Dioro share price.
In contrast the Avoca board and management have delivered strong operational
performance and company growth, and with its offer for all the Dioro shares,
provides a superior alternative to the Dioro shareholder to maximise value
extraction from the Dioro asset base.
Please see attached
a formal Notice of Variation - Extension of Offer Period for immediate release
to the market.
For the purpose of
ASX Listing Rule 3.2, Avoca confirms that:
(a) at the date of the Offer, Avoca (together with its associates) had a
relevant interest in 14.95% of Dioro’s ordinary shares; and
(b) at the date of this Offer extension, Avoca (together with its
associates) has a relevant interest in 17.66% of Dioro’s ordinary shares.
For further
enquiries, please contact:
Avoca Resources: Rohan Williams 08 9226 0625
Purple Communications: Warrick Hazeldine 08 6314 6300 / 0417
944 616