avoca hits back at experts's report

Avoca hits back at expert’s report

Kristie Batten -- MINING NEWS --
Friday, 29 May 2009

AVOCA Resources has disputed independent expert KPMG’s findings that its takeover bid for Dioro Exploration undervalues the company, arguing that the premium for the bid ranges from 34.2% to 58.2%.

In its target statement, Perth-based Dioro said KPMG had slapped a value on Dioro of $A1.40-2.28 per share, with a preferred value of $1.88 per share.

Avoca said the $1.88 figure did not reflect the value placed on Dioro by the market.

“Dioro shareholders should query the discrepancy between the KPMG valuation and the market prices of the Dioro shares,” Avoca said in a brief statement.

Avoca also noted that in the report, KPMG said successful transactions were typically likely to compete within an acquisition premium range of 25-40%.

The company said KPMG’s preferred value of $1.88 implied a premium of 376% to the pre-announcement price of 39.5c for Dioro.

Avoca and its advisers are analysing the target statement and will release a detailed response shortly.

Dioro, which this morning urged shareholders to reject Avoca’s offer, saw its shares jump 17% to 79.5c today.

Meanwhile, Avoca announced record production at its Trident gold mine for the four weeks ending May 24.

Trident produced 18,149 ounces of gold at a head grade of 6 grams per tonne gold with recoveries of 97.4%.

The Trident mill is achieving a processing rate of 1.2-1.3 million tonnes per annum, well above its nameplate capacity of 1Mtpa.

The company said it was well positioned to meet its 2010 financial year target of 180,000oz gold at cash costs of around $450/oz.

Shares in Avoca were up 4.5c to $1.795 today.