Ann: GMD: Second Supplementary Bidder's Statement, page-7

If Genesis gets 100% of Dacian, former Dacian shareholders will end up with 8.5% of Hoover House. Former Genesis holders will end up with 33.5%. Dacian has a mill and a reserve, Genesis only has a resource, but apparently has a management team which excites fund managers and is worth way more than the mill, Redcliffe, and Jupiter.

Lets assume the fund managers are right and haven’t just been drinking too much red cordial at corporate functions which I am not invited to. They put up placement funds which values 21.1% of Hoover house at $275 million. That values Hoover House at about 1.3 billion. That values Dacian assets at $110 million.

Now:

“If Genesis does not acquire a relevant interest in 90% of the Dacian Shares, it will be unable to undertake compulsory acquisition of the remaining minorities, and:

1.(i) Dacian will remain a separate company;

2.(ii) transactions between Hoover House (assuming the St Barbara Scheme is implemented) and Dacian will be on arms-length terms and / or may be subject to Dacian minority shareholder approval; and

3.(iii) future decisions regarding Dacian’s funding, assets and operations (including the future operating strategy for the Mt Morgans mill) will continue to be made by the Dacian Board (including where necessary by the Independent Directors) in the best interest of all Dacian Shareholders. “

It seems to me 77% is a done deal, so the question now is what about the remaining 23%? Dacian independent directors have been silent on why the remaining shareholders should not wait for (a) the company to stabilise with outside mill feed and (b) four months to pass after the offer expires, at which point Hoover House could make a better offer.

It strikes me as disingenuous for the independent directors not to acknowledge that the 23% is critical to Hoover House not looking like an expensive purchase of some more leases for mill already in need of an upgrade. According to them that critical 23% is worth about 25 million.

My guess is the takeover has fallen short of getting full ownership, and it is all about a second attempt which will need toget 75% of the 23%. For that Hoover House gets the mill, Redcliffe, and Jupiter and starts to look like much better proposition.

How much for the 23%? Shall we say $250 million?

I say we because I now hold DCN. Wish me luck.