13/07/2020 - 14:13

Alto rejects Habrok offer

13/07/2020 - 14:13

Bookmark

Save articles for future reference.

The directors of Alto Metals have recommended shareholders vote against a takeover bid from Habrok Mining, saying the offer was opportunistic and undervalued the company.

Alto rejects Habrok offer
Alto has launched a $5.1 million capital raising to fund exploration at its Sandstone gold project in WA. Photo: Alto Metals

The directors of Alto Metals have recommended shareholders vote against a takeover bid from Habrok Mining, saying the offer was opportunistic and undervalued the company.

Habrok, which challenged a previous bid from China-owned Goldsea Australia Mining, has offered to pay 6.6 cents per Alto share, representing a 12 per cent discount to Alto's closing price on July 10.

The offer today values Alto at around $19.4 million.

Alto said its directors were of the very strong view that the unsolicited offer undervalued the company, which had consistently traded above 6.6 cents since receiving the Habrok bid in May.

Alto has advised shareholders to reject the offer, with a formal recommendation from directors to be announced in due course.

The Habrok and Goldsea offers follow a bid from Middle Island Resources in March last year, which had offered five of its shares for every Alto share.

Subiaco-based Alto said the persistent interest from third parties highlighted the long-term value associated with its Sandstone gold project in Western Australia.

However, the company said it had struggled to fund exploration activities at Sandstone due to regulatory complexities associated with raising capital while under takeover offer.

Alto has now launched a one-for-four rights issue priced at 7 cents per share to raise around $5.1 million, which managing director Matthew Bowles said would fund exploration programs into the foreseeable future.

Alto's major shareholder Windsong Valley, an entity associated with the company's non-executive director Terry Wheeler, intends to subscribe for its full entitlement under the offer of $1 million.

Proceeds from the capital raising, led by Morgans Financial, will specifically go towards an infill and step-out drill program at Sandstone's Lord Nelson prospect.

“For well over 12 months, the company has been hampered with multiple, opportunistic, unsolicited approaches, rather than being able to focus on exploration to realise value of the Sandstone project,” Mr Bowles said.

“We are excited to have recommenced drilling at Lord Nelson to follow up on our latest results, which demonstrated the continuity of high-grade mineralisation.”

Alto announced in May an increased indicated and inferred mineral resource for Sandstone of 6.2 million tonnes at 1.7 grams per tonne of gold for 331,000 ounces.

That includes an inferred mineral resource for Lord Nelson of 1.8 million tonnes at 1.9 g/t of gold for 109,000 ounces.

“Lord Nelson is a priority focus for us and we expect further drilling will lead to additional resource growth from the known mineralisation that remains open down plunge and along strike to the south of the pit,” Mr Bowles said.

The Sandstone project, acquired by Alto in June 2016, is located in the state’s East Murchison region.

The company requested a trading halt today, which is expected to lift on July 15.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options