27 July 2009
Avoca extends offer period while it awaits
full disclosure from Dioro
ASX200
gold producer, Avoca Resources Limited (?Avoca?) (ASX:AVO)
has today extended the Offer period under its unconditional takeover
offer for all of the shares in Dioro Exploration NL (?Dioro?) for one
week so that it is now scheduled to close at 5.00pm (Perth time) on Tuesday 4
August 2009 (unless further extended). In light of Dioro?s ASX
announcement on 24 July 2009 (stating that Dioro has received a conditional
offer for the sale of its interest in the Frog?s Leg gold mine), this extension
is to allow Avoca and all other Dioro shareholders time to consider all of the
details that Dioro must immediately disclose in relation to this
proposal.
Avoca is surprised and very
concerned that Dioro would even contemplate the sale of its key producing asset
(especially in light of the geotechnical issues experienced with Dioro?s other
assets). Not only is such a sale likely to result in an immediate tax
liability (and consequent erosion of value), but it also means that Dioro
shareholders will be deprived of any upside from the Frog?s Leg gold
mine. Dioro shareholders would instead be left hoping that the Dioro
board is able to effectively use the resulting funds to achieve a satisfactory
return. In contrast, Avoca?s unconditional Offer (if accepted), which
remains the only offer available to Dioro shareholders, provides the Dioro shareholders
with an ability to retain an interest in Frog?s Leg (and other Dioro assets)
and to obtain an interest in Avoca?s first class assets (potentially with
roll-over tax relief if Avoca obtains an 80% interest in Dioro under its
offer).
Please see attached the following
documents for immediate release to the market:
(a)
a letter being sent to Dioro Shareholders explaining the extension; and
(b)
a formal Notice of Variation - Extension of Offer Period.
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 20.97% of Dioro?s ordinary shares.
Please follow the link
below to view the Notice of Variation:
http://www..purplecom.com.au/_content/documents/1273.pdf
For further enquiries, please
contact:
Avoca Resources: Rohan
Williams 08 9226 0625
Purple Communications: Warrick
Hazeldine 08 6314 6300 / 0417 944 616
Dear fellow Dioro Shareholder,
Extension of Offer Period while Avoca and
other Dioro shareholders await full disclosure from Dioro
As you will be aware, Avoca
Resources Limited (Avoca) is offering you 1 Avoca share for every 2.4
Dioro shares held by you. Avoca?s Offer remains the only offer
available to you. As at Friday 24 July 2009 (the last trading
date before finalisation of this letter), the Avoca Offer valued each Dioro
share at $0.717 (given a closing Avoca share price of $1.72), representing a
significant 81.4% premium to the $0.395 pre-announcement Dioro share price.
You will also be aware that
Avoca?s Offer is now wholly unconditional and Avoca has accelerated
its payment terms, so accepting Dioro shareholders have the certainty of
knowing that they will be issued the Avoca shares being offered within 10
business days of receipt of a valid acceptance or their acceptance instructions
being implemented.
Avoca?s Offer was due to close at 5.00pm
(Perth time) on Tuesday
28 July 2009. In light of Dioro?s ASX
announcement on 24 July 2009 (stating that Dioro has received a conditional
proposal for the acquisition of its interest in the Frog?s Leg gold mine, but
fails to provide any specific details concerning that proposal), Avoca has
today extended its Offer period one week so that it will now close at 5.00pm
(Perth time) on Tuesday 4 August 2009 (unless further
extended). This is to allow Avoca, and all other Dioro shareholders, time
to consider all necessary details that Dioro must immediately disclose in relation
to this proposal. Accompanying this letter is a formal notice in respect
of this extension. At the date of this Offer extension, Avoca (together with
its associates) has a relevant interest in 20.97% of Dioro?s ordinary
shares.
Avoca is both surprised and very
concerned as Dioro?s major shareholder that it would even contemplate the sale
of its key producing asset, especially in light of the serious geotechnical
issues experienced with Dioro?s other assets. Not only is such a sale
likely to result in an immediate tax liability (and consequent erosion of
value), but it also means that Dioro shareholders will be deprived of any
upside from the Frog?s Leg gold mine. Dioro shareholders would instead be
left hoping that the Dioro board is able to effectively use the resulting funds
to achieve a satisfactory return.
In contrast, Avoca?s unconditional
offer (if accepted) provides Dioro shareholders with an ability to retain an
interest in Frog?s Leg (and other Dioro assets) and to obtain an interest in Avoca?s
first class assets (potentially with roll-over tax relief if Avoca obtains an
80% interest in Dioro under its offer).
Avoca has serious concerns about
the inadequate level of disclosure in respect of Dioro?s dealings with
Northgate Minerals Corporation (Northgate). Given the limited
information released to date on the proposed asset sale, Avoca considers that
the Dioro board must now immediately provide its shareholders and the market
with further details regarding both the proposed sale of Frog?s Leg and Dioro?s
future strategy. At a minimum, the information that Dioro shareholders
and the market now require to make an informed assessment includes the
following:
1.
Proposed sale of interest in Frog?s Leg:
?
What are the complete terms of the Northgate offer?
?
What is the price that has been offered and what is the consideration
that has been offered ? cash or shares in Northgate?
?
What are all of the conditions to the offer?
?
What is the expected timing to close the Northgate offer?
?
When will Dioro shareholders be able to vote on the Northgate offer?
?
Are there any other consequences of the proposed sale? For instance,
what happens to the debt owed to BNP Paribas?
2.
Dioro?s future strategy:
?
The Dioro board must advise its shareholders what it would do after any
sale of its Frog?s Leg interest. For example:
o
How will the proceeds of the sale be used?
o
What will be the tax consequences to the company of the sale?
o
Is it intended that there will be a distribution to Dioro shareholders?
If so, how much and when? What will be the tax consequences to the
shareholder?
o
How much will be retained within the company for working capital
purposes?
?
Following any sale of its interest in Frog?s Leg, Dioro will be left
with the proceeds of the sale and the South Kalgoorlie
operation. As gold production from the South Kalgoorlie operation is currently
suspended following the recent pit wall failures at the HBJ and Mt.
Marion pits, the board of
Dioro needs to demonstrate to its shareholders:
o
What is the detailed plan regarding the restoration of value at both the
HBJ and Mt. Marion
operations? How and when will these operations be reinstated to full production?
o
What will be the new management forecast of gold production for the
2009/10 financial year with no Frog?s Leg contribution?
For Dioro shareholders to make an
informed decision on the merits of any Northgate conditional proposal compared
to Avoca?s unconditional offer, these questions are the minimum that need to be
answered by the Dioro board. Successful completion of Avoca?s Offer will enable
Dioro shareholders to participate fully in the upside potential of not only
Frog?s Leg, but also Avoca?s strongly performing Higginsville gold mine.
We encourage you to consider all
information that has been sent to you and to ACCEPT Avoca?s compelling
and unconditional Offer. We reiterate that Avoca?s
unconditional offer is the only offer currently available to you.
If you have any questions about the Offer or require
assistance with your acceptance, please call the Avoca Offer information line
on 1300 751 719 (callers within Australia)
or +613 9415 4346 (callers outside Australia).
Yours sincerely,
Rohan Williams
Managing Director and CEO
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