Ann: OZL: Takeover Offer for Avanco - Webcast, page-157

I don't like this offer from OZL which significantly under values AVB. Its an opportunistic bid which should have been batted away by management.

Too many questions in my mind on what has occurred here.

Why, with so much seriously company changing news pending release, would AVB consider selling to OZL?

With CentroGold regulatory issues looking likely to be rectified within months, allowing it to go into construction later this year, production year after. Followed by PB into construction next year and production year after that. Also, awaiting resource increases at CentroGold, PB and AN. Don't even get me started on what the drill results could be like coming our of Pantera.

Conservitably I have them at $100m per annum EBITA and at a PE multiple of 10 makes them a $1B company with only AN, PB and Centrogold producing on known resources.

So why sell now after a 10 year journey building the project pipeling they have? When another 12 to 24 months they are assured of mining stardom and a $1B MC? They would have more than OZL as a suitor when in that league.

So where to from here? This is an offer from OZL and what it does is place a "for sale" sign on AVB for all to see. It shows that management are open to selling the company and it also places a value on it. So whats next?

Who else is interested in buying a company with the assets that AVB owns?

Who wants to take a serious foothold in the Carajas mining provence which has the largest concentration of IOCG deposits in the world?

What does Vale think of this development? How do Vale feel about having OZL staking such a claim in Vale's tightly held region?

What could Vale do to protect its dominant position in the Carajas? Could they consider making a strategic acquisition of AVB to hedge against future competitive dramas with OZL?

What of the multitude of other potential suitors from various countries, perhaps Canadian miners?

What of the gold companies who are looking for a project such as CentroGold? Sprott or many others?

Right now it looks messy but water still to go under the bridge IMO. One thing I know is that AVB has very good assets in the projects that they have developed. The problem with AVB is that they are not strong at board level which is why the wheels under this bus are shaking. The board is not independent and this causes huge problems of conflict of interest.

In the absence of further information I will assume that directors are doing the right thing by shareholders and perhaps have a strategy to create a more competitive auction to foster some price tension. I also assume that they familiar with the corporations act and their responsibilities to act in the interests of all shareholders.

The current deal is not even close to fair value for shareholders.