I don't think that AVO are in a position to offer a cash...

I don't think that AVO are in a position to offer a cash component as they already have enough debt and will not be wanting to increase it.

Personally I think you have to look at the offer based on the value of gold in the ground, as this is what AVO so desperately need. The AVO share price is heavily overvalued based on this metric and DIO are currently undervalued (look at the independent report produced for North Queensland Metals (NQM) in their recent presentation). The current Enterprise Value per JORC compliant ounce in the ground is $883 for AVO and only $81 for DIO.

This means that DIO has a long way to go to fair value whereas AVO is already there (or even overvalued).

I personally don't think the increased offer comes anywhere near fair value and don't want to hold any AVO shares as I can't see where the upside will come from.