Avoca Resources has hit back at KPMG's high valuation of takeover target Dioro Exploration's share price, saying it does not reflect market value.
Dioro last night released its target statement in response to Avoca's bid, with independent expert KPMG concluding the offer was not fair or reasonable, and assessed the value range of a Dioro share at $1.40 to $2.28, with a preferred value of $1.88.
Shares in Dioro closed up 11.5 cents to 79.5c today, while shares in Avoca closed up five cents to $1.80.
"KPMG values the Avoca offer at $0.60 per Dioro share, assuming 100 per cent acceptances and based on the $1.69 closing price of Avoca shares yesterday," Dioro said.
In the independent expert report, KPMG, on a preferred basis, valued Dioro's 49 per cent interest in Frog Leg at $87 million and its interests in other exploration assets at $81 million.
The value given for Dioro's total mineral assets was $177.6 million while the total equity value was calculated at $182.4 million.
Given that Dioro currently has a total of 97.2 million shares and options, KPMG calculated that the target's preferred share price value was at $1.88.
KPMG also said that Avoca's minimum trading price needs to be at a minimum of $3.95 for Dioro's shareholders to be not "financially disadvantaged".
Avoca today said that it was reviewing the target statement and will release a detailed response in due course, however noted that KPMG's preferred value for Dioro's shares did not reflect the value placed on Dioro by the market.
Dioro said the offer was opportunistic and timed to take advantage of the weakness in its share price.
Avoca's gold mines are near Dioro's at Kalgoorlie, Western Australia and believes there are efficiencies to be gained by combining the assets into one company.