avo comment on dioro target’s statement

Dioro Target’s Statement

Avoca Resources Limited (ASX:AVO) notes the release, yesterday, of the Dioro Exploration NL (ASX/TSX:DIO) Target’s Statement. The Target’s Statement contains a report by KPMG, who are also Dioro’s auditors.

Avoca and its advisers are analysing the Target’s Statement and will release a detailed response in due course. In the interim, Avoca simply notes that KPMG’s preferred value for Dioro shares of $1.88 per share does not reflect the value placed on Dioro by the market.

The Dioro closing price immediately prior to the announcement of Avoca’s bid was 39.5 cents and on the trading day prior to release of the Target’s Statement was 66.5 cents. Dioro shareholders should query the discrepancy between the KPMG valuation and the market price of the Dioro shares.

KPMG, in their report, state that “in Australia, successful transactions are typically likely to complete within an acquisition premium range of 25 percent to 40 percent.” The premia offered by Avoca as set out in its Bidder’s Statement (using pre-announcement prices for both Avoca and Dioro shares) range from 34.2% to 58.2%. KPMG’s preferred value of $1.88 implies a premium of 376% to the pre-announcement price for Dioro.