The Gascoyne Resources board has urged shareholders to reject a $110 million takeover offer from Westgold Resources, labelling the deal as “inadequate”.
Gascoyne affirmed it would instead proceed with a previously proposed merger with Subiaco-based gold explorer Firefly Resources, advising Westgold’s counteroffer did not represent a superior alternative.
The takeover target says its board remains committed to completing a scheme of implementation deed arranged with Firefly in June.
Westgold lobbed an off-market takeover bid for Gascoyne in September offering one of its shares for every four shares in Gascoyne.
Gascoyne today announced that Westgold’s offer undervalued company shares and that major shareholders intended to reject the deal, including Deutsche Balaton, which holds a 22 per cent stake in Gascoyne.
Gascoyne managing director Richard Hay said the board firmly believed a Firefly merger provided greater value to shareholders.
“While we still await the bidder’s statement from Westgold to support its intention to make a takeover offer for Gascoyne, the board is of the view that the offer does not represent a superior alternative to the proposed merger with Firefly,” Mr Hay said.
In conjunction with the move, Gascoyne announced it would be deferring a planned extension at the Gilbey prospect which is hosted within the Dalgaranga gold project in Western Australia’s Daggar Hills.
My Hay said the company had been able to make the decision due to higher operational flexibility avaiable under the proposed Firefly merger and would save about $60 million in waste stripping and reduce overall costs.
Gascoyne shares are down 9.52 per cent and trading at 38 cents at 1:02 pm AEDT.