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