tell it like it is!, page-2

I think the release was a bit cheeky considering the full details of the AVO offer was released on 14 Jan and RMS made their announcement on 19 Jan. Quite clearly the AVO offer is there for all to see, and the Directors of DIO are able to make a comment and their key reasons do have a degree of truthfulness to them (depending on the perspective used).

Based on historical VWAP, the offer of AVO is higher and given the AVO starting position AVO is in a stronger position to take control. This is factual, but not exactly helpful (or necessarily relevant).

But re the VWAP, this is not that relevant where there has been a justifiable increase in share price due to new information. Image if due to some new drilling, RMS found a large new discovery which resulted in a massive increase in price... the 3 month VWAP wouldn't change much, however quite clearly the measure today would be different. What if AVO price went down substantially because people thought the quality of their earnings was actually worse than they previously thought.

The key thing is the price now... so RMS need to get their price up quickly if they want to have any chance of getting more shares, because at the moment, people are more likely to choose AVO.

BUT (and it is a big but), I found that the DIO directors recommendation quite strange in that it seemed to imply to reject until after the AGM and then look at the circumstances. The directors each said that they would not sell now, but would re-assess following the conclusion of the AGM. They may be leaving themselves some wiggle room, especially if RMS put in some strong numbers with January production.

I'm not sure that it is worth it as it may be a waste of cash, but RMS could say we are going to declare a dividend to people on the register around the closing time as this may be a way to increase the consideration. EG RMS have 290m shares on issue and will probably have $40-$45m cash at the end of the month. They could easily declare a dividend of 5c per share, which would translate into an extra 10.5c to each DIO shareholder if they accept. May also push up the RMS share price if people buy the stock for the dividend providing extra incentive. The dividend may not need to be that much either.

Will be very interesting over the next couple of weeks.

If RMS get over 50% in the last week of the offer it will automatically be extended by 2 weeks I think. And if that date goes after the ex-div date, then those late acceptors will miss out on the dividend, but will still be likely to accept with RMS now being a 50% holder. I reckon AVO would probably accept then as well to pick up a large stake in RMS.

Cheers
Marv