28/07/2009 - 15:33

Northgate cuts Dioro acquisition talks

28/07/2009 - 15:33

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Dioro Exploration's defence against Avoca Resources' hostile takeover bid has collapsed after its white knight, Northgate Minerals Corporation, terminated talks over the proposed acquisition of Dioro's stake in a key gold asset.

Dioro Exploration's defence against Avoca Resources' hostile takeover bid has collapsed after its white knight, Northgate Minerals Corporation, terminated talks over the proposed acquisition of Dioro's stake in a key gold asset.

In a notice to the Toronto Stock Exchange, Northgate said talks have ended with Dioro over the latter's 49 per cent interest in the Frog's Leg gold mine near Kalgoorlie.

The Canadian company did not say why talks had been terminated, only saying that it continues to "evaluate strategic opportunities and targeted acquisitions for growth that will generate value for our shareholders".

It was only last week that Dioro revealed Northgate's acquisition plans, which had prompted Avoca to extend its all-scrip takeover bid and demand that Dioro release further details of the proposal.

At the time, Dioro said it had planned to release further details within one week and yesterday placed its shares in a trading halt pending an announcement regarding Frog's Leg.

Late this afternoon Dioro issued its fifth suplementary target statement and confirmed that talks with Northgate had ceased.

Dioro said the terms of the Northgate proposal had changed to an extent that it was unlikely to be a superior offer to Avoca's improved all-scrip offer of 2.4 shares for every Dioro share, valued at around $68 million.

"The Directors confirm that as at the date of this Fifth Supplementary Target's Statement, they are in discussions with the Directors of Avoca, and therefore recommend that Dioro Shareholders TAKE NO ACTION in relation to the Amended Offer until a further announcement is made," Dioro said.

Avoca has lifted its stake in Dioro to 21.16 per cent, from 20.23 per cent.

Avoca's unconditional, all-scrip bid is scheduled to close on Tuesday August 4.

Avoca shares were unchanged at $1.715.

 

Northgate's announcement is below:

 

 

Northgate Minerals Corporation (TSX: NGX, NYSE Amex: NXG) has confirmed today that it has terminated discussions with Dioro Exploration NL ("Dioro") regarding a potential material transaction, as previously disclosed on July 20, 2009.

Northgate continues to evaluate strategic opportunities and targeted acquisitions for growth that will generate value for our shareholders.

Northgate Minerals Corporation is a gold and copper producer with mining operations, development projects and exploration properties in Canada and Australia. The company is forecasting record gold production of over 390,000 ounces in 2009 and is targeting growth through further acquisition opportunities in stable mining jurisdictions around the world. Northgate is listed on the TSX under the symbol NGX and on the NYSE Amex under the symbol NXG.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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