AVB (ASX) Ann: Avanco Directors Accept Oz Minerals Offer

Originally posted by Kalenn ↑

$100 million investment to put a plant on Centro.

$500 million approx free cashflow from first 3 years production.

So OZL with their generous offer are willing to take on the burden of building a plant, they tell us they are good at that and I trust AVB's Wayne Phillips is, which means their $400 million offer and plant cost will be paid back in 3 years.

The loose change?
1 million to 1.5 million tonnes of copper at 2 to 3% plus likely 3 million ounces of gold at near 2 g/tonne.

My current thoughts are we can not loose sitting it out. They will not IMO get to 90%. They may try to screw smaller share holders but there is a limit to which they will succeed in that endeavour. Ultimately it will be cheaper to offer fair value (which 17c is not) to the remainder in 6 months time. Should make for a nice Chrissie present.

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Kalenn, Surely you must acknowledge that there is some possibility that you can lose by sitting it out. If OZL can get control of AVB (which looks likely), then developing the AVB assets on the current timeline becomes less urgent. With OZL having its hands full developing its own assets, you might find the timeline for AVB gets pushed out considerably in the future. It may suit OZL to stage the development of Centro / Pedra Branca to coincide with the depletion of the stockpile processing at prominent hill. Just an example but the point is the company will be run to suit OZL not small shareholders. It is certainly one of the outcomes which can have a negative affect on the AVB share price.

IMO there is little to no chance OZL comes back with an improved offer to the remainder in the medium term. From my experience minority shareholders that hold on get hurt more times than not. Even if OZL does not go out of its way to as you put it, ''screw" the minority shareholders, they will still lack the incentive to properly promote the company to new and current investors, maintain proper funding levels etc. All these factors can be negative for the share price and have a great affect on minority shareholders realising the value they desire.

I'm not saying you are wrong but nor do I think it is a straightforward decision and it is certainly one I would give great thought to.