Andean says 'no' to takeover

Perth-headquartered gold explorer Andean Resources continues to advise shareholders to take no action on the off-market takeover advances of Kingsgate Consolidated Ltd.

A company spokesman told WA Business News that it believed the Kingsgate bid undervalued Andean.

"We believe the Kingsgate offer is opportunistic and Andean shareholders would be better placed if the company was allowed to carry on with its exploration activities," the Andean spokesman said.

"That's not to say there aren't some other white-knights out there."

Kingsgate made its takeover play for Andean on February 22 this year.

Under the terms of the offer, Kingsgate offered Andean shareholders 1 Kingsgate share for every 15 Andean shares held. In addition, Andean shareholders are entitled to receive the Kingsgate interim dividend of 5 cents per Kingsgate share provided that the offer is successful by April 21, when the offer will close.

Andean's principal asset is the Cerro Negro exploration project in Argentina.

Kingsgate is an Australian gold and silver exploration company. Its board believe that the acquisition of the Cerro Negro project would provide an excellent complement to Kingsgate's growing exploration and development portfolio.

Kingsgate said the offer gave Andean shareholders the opportunity to realise a premium for their shares.

This is a point disputed by Andean. The truth to the argument depends on when a valuation is made, as fluctuating share prices affect the value to shareholders of the proposed offer.

Kingsgate for its part said the takeover will give Andean shareholders increased market presence through exposure to a S&P/ASX 200 listed company, and a strong balance sheet with no debt.

The Kingsgate offer is conditional on obtaining 50 per cent share acceptance and Foreign Investment Review Board approval.

"The board is considering its position and will produce a statement in the next 10 days outlining its position on the takeover and its reasons," the Andean spokesman said.