West Perth-based Avoca Resources Ltd's joint venture partner Encounter Resources Ltd has lodged a prospectus to raise $ 4 million to be used to further develop the two companies joint venture arrangement for the exploration of uranium deposits in WA.
West Perth-based Avoca Resources Ltd's joint venture partner Encounter Resources Ltd has lodged a prospectus to raise $ 4 million to be used to further develop the two companies joint venture arrangement for the exploration of uranium deposits in WA.
Below is the full announcement:
Encounter Resources Limited ("Encounter") has today lodged with the Australian Securities and Investment Commission ("ASIC") a Prospectus for the issue of up to 20,000,000 shares at an issue price or $0.20 each to raise a total of up to $4,000,000 with the right to accept over subscription of 5,000,000 shares at an issue price of 20 cents each to raise an additional $1,000,000.
The Prospectus includes a Priority Offer to Avoca Resources Limited Shareholders in respect of up to 5,000,000 shares offered under the Encounter Prospectus. The priority given to Avoca Shareholders will be in respect of applications for between 10,000 shares ($2,000) and 80,000 shares ($16,000).
The Encounter Prospectus including further details of the Priority Offer can be obtained from that company's website www.encounterresources.com.au.
The Priority Offer will be available to those Avoca Shareholders registered as shareholders on the Avoca share register on or about 16th February 2006 which is the date the offer is expected to open. There is no record date as such for the entitlement. Encounter will mail a copy of its Prospectus to each Avoca Shareholder in the last week of February.
Avoca has a joint venture arrangement with Encounter for the exploration of uranium deposits in Western Australia. Avoca and Encounter commenced a targeting exercise for uranium mineralisation in Western Australia during December 2004. Together the companies assembled the uranium project portfolio which forms the basis of the joint venture and the Encounter Prospectus.
The alliance provides Avoca with a low cost opportunity to develop a stake in Western Australia's emerging uranium sector, whilst allowing it to continue its focus on bringing its 100% owned Higginsville Gold Project into production.
In return for Encounter having the right to earn a 60% interest in the uranium rights of Avoca's Lake Way tenement, 20km south of Wiluna, Avoca will retain a 20% free-carried interest in each of Encounter's projects until April 2007. At the completion of Avoca's free-carried interest period (April 2007), Avoca can contribute 20% of ongoing costs for any of Encounter's projects, or reduce its interest through conventional dilution to 5%, at which time its interest is converted to a 1% NSR for that project. In relation to the Lake Way project, once Encounter has earned 60% of the uranium rights, Avoca can contribute to 40% of ongoing costs, or dilute its interest to 25%, after which it is free-carried until a decision to mine.
Encounter and Avoca have maintained a strong working relationship since the inception of the joint venture and look forward to continuing this relationship in future years.
The offer of ordinary shares in Encounter is made in a prospectus dated 9th February 2006. Any Avoca shareholders wishing to acquire shares in Encounter will need to complete the application form accompanying the Encounter Prospectus.
The anticipated closing date for the Priority Offer to Avoca Shareholders is 9th March, 2006 although the Encounter board reserves the right to close the offer earlier if oversubscribed.
The shares offered by the Encounter Prospectus should be considered speculative. The fact that Avoca Resources' Shareholders have a priority allocation is not to be taken in any way as a recommendation or otherwise by the Directors of Avoca of the merits of Encounter, or the securities offered pursuant to the Encounter prospectus.The Avoca Directors recommend Avoca Shareholders should read the Encounter Prospectus in its entirety and if you do not understand its contents or are in doubt as to the course you should follow, you should consult your stockbroker or professional advisor.
