20/07/2009 - 10:04

Avoca, Dioro takeover battle rages on

20/07/2009 - 10:04

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Takeover target Dioro Exploration says it is in advanced discussions with Canadian copper and gold miner Northgate Minerals Corporation as original suitor Avoca Resources extends its $68.5 million offer.

Takeover target Dioro Exploration says it is in advanced discussions with Canadian copper and gold miner Northgate Minerals Corporation as original suitor Avoca Resources extends its $68.5 million offer.

Dioro is the subject of a hostile offer by rival gold miner Avoca, which neighbours Dioro in the Kalgoorlie region.

Dioro said in a statement late today that it expected details of Northgate's proposal "regarding a potential material transaction" within a week.

Dioro said the new proposal appeared to be better than Avoca's $68.5 million all-scrip offer.

"On the basis of its discussions with Northgate to date, the board of Dioro is of the view that the proposed transaction, if completed on the terms currently being contemplated, is likely to be a superior transaction in value to the current Avoca offer," Dioro said in the statement.

"It is currently contemplated that details of the proposed transaction will be announced within one week."

Northgate is listed on the Toronto Stock Exchange and its operations are in Victoria and Canada.

Avoca today extended its all-scrip takeover offer for Dioro by one week. The offer of 2.4 Avoca shares for every Dioro share was scheduled to close tomorrow.

Since the launch of Avoca's takeover offer, Dioro has continuously stated it has been in talks with a number of unnamed third parties regarding possible mergers but did not release details.

Avoca had earlier today urged Dioro to come clean on the talks.

"The Dioro Board should now provide Dioro shareholders with a frank and complete report on the status of such discussions and an indication whether any of them are likely to result in a competing preferable offer," Avoca said.

Dioro continues to reject Avoca's improved, unconditional offer of one Avoca share for every 2.4 Dioro shares, saying the proposal undervalues its assets.

Avoca has claimed that Dioro is overstating the worth of its assets, saying the target needs "a reality check".

Meantime, Avoca slammed Dioro's move to place its shares in a trading halt pending the release of a resource upgrade at its Frog's Leg gold operation in Kalgoorlie, a joint venture with Canada's La Mancha Resources.

Dioro said the extension would enable Dioro shareholders to "digest" a reserves increase of 45 per cent to 789,504 ounces (oz), with 386,857oz attributable to Dioro, extending the mine's life by 1.2 years.

Avoca claimed today the trading halt had been unnecessary because the reserves increase had already been been disclosed by Dioro in a report by independent export KPMG.

"Avoca does not believe that Dioro's increase in reserves is new information, and therefore it does not justify Dioro going into trading halt, particularly at this late stage of Avoca's offer," Avoca said.

A Dioro spokesman justified the trading halt, saying the KPMG report was not a formal reserve statement, so a separate announcement needed to be issued to the market.

Avoca holds a 17.66 per cent relevant interest in Dioro.

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