AVO - Avoca Resources

[Miner]

Looks like Ramelius Resources may trump Avoca's offer for Dioro


http://news.smh.com.au/breaking-new...ivals-avocas-bid-for-dioro-20090730-e2uy.html

i DON'T get it.

First AVO takes over DIO pricing SP of DIO at much higher price than market. They are paying $1 for DIO against market price 71 cents.

Why not all share holders start buying shares of DIO from market and then sell them to AVO at $1.

Then it comes RMS to buy DIO shares.

My confusion if all DIO shares got sold to AVO then there is no DIO share in market. What RMS will do > Very confused and need some light

 

[LeeTV]

It's decision time for Dioro in takeover imbroglio
Bryan Frith | August 12, 2009
Article from: The Australian
http://www.theaustralian.news.com.au/business/story/0,,25917023-16941,00.html

AVOCA Resources has clearly tired of waiting on the Dioro Exploration board to decide between the competing scrip bids of Avoca and Ramelius Resources.

Avoca yesterday declared its bid final, as to both the offer price and the offer period. The bid was due to close today but has been extended by a week.

Given that relatively short time and the fact that there is no longer any prospect of Avoca further sweetening its offer terms, the Dioro board will now be forced to choose between the competing offers.

It is now almost two weeks since Ramelius surprised by announcing an offer of two Ramelius shares for each Dioro share the day after the Dioro board recommended an increased offer from Avoca of one of its shares for each 2.3 Dioro shares.

The Ramelius offer valued Dioro shares at $1, well above the 74.5c a share value of the enhanced Avoca bid. The Dioro responded by advising shareholders to take no action until they make a recommendation on the Ramelius offer, but added that based on the sharemarket price it may be a superior offer.

The decision for the Dioro board should be which company's scrip offers the better prospects.

Dioro shareholders would own 45.5 per cent of a merged Dioro-Ramelius but only 14 per cent of a combined Avoca-Dioro. That reflects not only the offer terms but the fact that Avoca is by far the more substantial company of the two.

In terms of assets, Dioro holders would stand to gain more from the Avoca offer than the Ramelius alternative. In fact, acceptance of the Ramelius bid would involve a transfer of wealth from Dioro shareholders to Ramelius holders.

Following the recent upgrade of the Frog's Legs joint venture, Dioro has reserves of 583,000 ounces, whereas Ramelius does not yet have any JORC compliant reserves; instead it has only 118,000oz of inferred and indicated (not even measured) at its Wattle Dam operation in WA, yet has begun underground development aimed at producing a single year's production of 70,000oz.

Dioro has 2 million ounces of resources and on that basis would be contributing 95 per cent of the resources of a combined Ramelius-Dioro. But around 1.5 million ounces of those resources have been sterilised by two major pitwall collapses at the South Kalgoorlie project, which may now be worthless.

If those resources were excluded, Ramelius would still be providing only 19 per cent of the resources.

Avoca produced almost 53,000oz of gold in the June quarter at its Higginsville operation and is aiming to produce 160,000-200,000oz a year for at least the next eight years. Moreover, the Trident mine is open at depth raising the prospect of a much longer mine life.

Acquisition of Dioro would lift Avoca to a 250,000oz-a-year producer and the company has ambitions to become the pre-eminent mid-tier gold company, producing 5000,000oz a year.

If Dioro holders were to accept the Avoca offer, their implied share of Avoca's production would be 80,000oz, their implied share Avoca's reserves would be 80,000oz and the implied share of its resources would be 203,000oz.

By way of comparison, their implied share of Ramelius' production would be 32,000oz (one year only), no reserves andtheir implied share of resourceswould be 54,000oz.

On that basis, Dioro holders have more to gain by accepting the Avoca offer.

Avoca's share price is at present depressed by its scrip offer, with short sellers active in the stock. At its present price of $1.72, its offer values Dioro shares at 74.8c a share. Dioro's independent expert conceded that if Avoca secured 100 per cent of Dioro, its share price would be re-rated and suggested a price range of $1.96-$2.22, with a preferred price of $2.10 a share.

At $2.10 a share, the Avoca offer would value Dioro at 91c a share. At $2.20 a share the value would increase to 95.6c a share, which is much closer to the implied value of the Ramelius offer.

Curiously, the Ramelius share price has not suffered as a result of its scrip offer, despite the amount of shares that would need to be issued. While the Ramelius share price dipped 1c to 51c yesterday, that still values its offer at $1.02 a Dioro share, or more than when the bid was first announced.

Avoca argues that the Ramelius share price is heavily overvalued and there is a mismatch of asset base and market capitalisation.

Assuming a gold price of $1130 a tonne, Ramelius' stated resources have a value of $134million, yet its market capitalisation is $112m. Avoca points out that Ramelius would need to convert its resources into reserves, complete all operational and capital development, all stoping and cover all overhead costs for zero dollars for Wattle Dam to have an intrinsic value of anything even remotely close to its current market value.

Moreover, Avoca's offer is unconditional, it already owns 24 per cent of Dioro and has stated that it won't accept the Ramelius offer.

Ramelius, therefore, cannot obtain 100 per cent, but it could satisfy its minimum acceptance of 50.1 per cent if the Dioro board were to recommend its offer. Apart from the fact that it raises the prospect of Dioro remaining listed with two holders owning at least 74 per cent of the company, it would also mean that neither Ramelius nor Avoca would be able to access the cashflows generated by Frog's Legs and South Kalgoorlie.

That is likely to be of greater significance to the much smaller Ramelius, as Avoca already generates a strong cashflow from Higginsville.

Ramelius is yet to lodge its bidder's statement, although there are suggestions it is poised to do so. Avoca is urging the Dioro board not to wait on that document, arguing enough is known for it to decide now which bid to support.

That's because Avoca has given itself very little wriggle room. If acceptances over the next week take it to at least 50 per cent of Dioro, then its offer automatically extends for at least a further two weeks, and longer if Avoca wishes it. But if Avoca falls short of 50 per cent, then its offer is over.

There are few large shareholders. Baker Steel owns 12.66 per cent, while Dioro's Frog's Legs joint venture partner, La Mancha, owns another 2 per cent, as does Mark Creasy, but much of the register is held by retail holders.

Avoca has set itself a stiff task to reach 50 per cent within the next week, even if the target board maintains its recommendation, and a possibly herculean task if it recommends Ramelius.

Ramelius last night attempted to make that task even more difficult by removing all conditions (including the 50.1 per cent minimum acceptance) other than FIRB approval. Avoca may yet rue that it did not extend the offer by at least two weeks.

 

[LeeTV]

“Importantly, Baker Steel and La Mancha Resources Australia did not accept Ramelius’
inferior offer and neither will Avoca,” Mr Reynolds said.

The fact that these guys didn't take up the Ramelius offer says it all imo.




Avoca reaches 44.85% at close of Offer for Dioro

ASX200 gold producer, Avoca Resources Limited (ASX:AVO) is pleased to announce
that its takeover offer for Dioro Exploration NL (ASXIO) closed at 5pm (Perth time)
on Wednesday 19 August 2009, by which time its relevant interest in Dioro had
reached 44.85%.
To the best of Avoca’s knowledge, most of Dioro’s larger shareholders (including,
significantly both Baker Steel and La Mancha Resources Australia accepted Avoca’s
Offer.
Avoca Chairman Robert Reynolds said this clearly demonstrates that major and
sophisticated investors considered the Avoca Offer (and the receipt of Avoca scrip) to
be superior to the proposed Ramelius offer.
“Avoca would like to thank and welcome its new shareholders, who will now have the
opportunity to be part of an ASX200 company with the credentials to become
Australia’s pre-eminent mid-tier gold producer.”
Baker Steel is a specialist investment manager in gold and natural resources and La
Mancha is a Canadian listed gold company which operates the Frog’s Leg gold mine in
which it owns 51% and Dioro has a 49% stake.
“Importantly, Baker Steel and La Mancha Resources Australia did not accept Ramelius’
inferior offer and neither will Avoca,” Mr Reynolds said.
Launched on 14 April 2009, the Avoca takeover offer was open for approximately four
months.
Pursuant to Listing Rule 3.3, Avoca advises that as at the end of the offer period,
Avoca and its associates have a relevant interest in 44.85% of the fully paid ordinary
shares in Dioro, and therefore that compulsory acquisition will not proceed.
As Dioro’s major shareholder, Avoca intends to take an active interest in the affairs of
Dioro.

 

[Supra]

AVO - Trident Mine

Trident is to produce 190k ozs+ @$A 650/oz.. at least 10 year mine life.
Potential to find more gold in the surrounding highly prospective area.

AVO is a top quality mid rang Australian Gold producer......

 

[fuzzie]

After taking a first look at the numbers here it looks like AVO will have sustainable profits over the next few years, enough even to fully repay debt in say 2 years.

What are the chances a Gold stock like this will start paying dividends? Or do they just plan to pocket all the profits and use them to do things like mop up Dioro?

 

[Supra]

“Avoca would like to thank and welcome its new shareholders, who will now have the
opportunity to be part of an ASX200 company with the credentials to become
Australia’s pre-eminent mid-tier gold producer.”
Baker Steel is a specialist investment manager in gold and natural resources and La
Mancha is a Canadian listed gold company which operates the Frog’s Leg gold mine

The Short Sellers & the fall in the Gold price have sent AVO into quick share price retraction Whilst other Mid Range Gold Stocks have stabilised, AVO continues to fall. Down over 10% so far this month.
Anybody care to say when the SP will stabilise & resume an upward trend?

With share holders such as AVO has on the register, the future should be secure. The mines are producing & there is profitability, but still the SP still heads south.

As for a dividend.............. you will be waiting a long time.............The debt will be reduced, but a dividend is not likely....

 

[Logique]

Don't blame me for the short selling, I've never owned any AVO. But as a result it's now more attractively priced. Recent signs of consolidation in the USD vs world currencies haven't helped AVO and others like LGL, but with Charlie Aitken of Southern Cross Equities and other gold bugs cheering it, I think AVO will have it's day. It's on my watchlist.

 

[Logique]

Supra,
if you stuck it out with AVO, today's chart might cheer you up. Today was generally a good day for most commodities stocks, but all the same it's a nice move in AVO, finishing at 1.925

 

[Nicks]

Although I sold out at $2.16 I continue to follow AVO with interest as I now hold a chunk of Integra and Ramellius. I also think Avoca along with Integra, Ramellius and Dioro will all continue to perform.

What do people think of the latest increased offer for Dioro? Trying to get over 50% perhaps and trumping Ramellius who themselves increased their offer but no longer can increase it further perhaps.

I am of the opinion that there will be some further consolidation between all 4 of these players (hence my holdings). All of them have been making consistent excellent resources which also adds confidence to the area geographically and geologically.

 

[Logique]

If I was a DIO holder I wouldn't need to think about it for very long.

It must be odds-on now that AVO will get Dioro, with an ensuing upward re-rating as per, but not necessarily limited by the price range within the analysis in posts above, i.e. depending on movement of the gold price. Noting particularly the 13th Aug 2009 article (thanks for that LeeTV).

 

[JTLP]

So what's been happening in the life of Avoca since the last post?

Today, CBA's holding in AVO was upped. I take this with a grain of salt as they have often chopped and changed their holding in the past year. The price was up today which was nice but again...watching and waiting.

The new Avoca, as they are calling it, has the following:

290M shares on issue
70% register instutional
12M options (management)
A market cap of A$550M ($1.95)
Cash & Cash Equivalents A$28.8M
H12010 Profit - $34M

The reserves and resource base (inclusive of DIO) is now 3.639 Million oz...a nice amount of gold in them hills!

They are targetting 190,000 oz's for the 2010 calender year at cash costs of $452 per oz (net of royalties).

They've also recently had some fantastic hits at Higginsville and Musket. An extract from the Paydirt Conference on Higginsville:
- Outstanding potential for additional exploration discoveries within 2,700km² of underexplored, high-degree tenure. High undiscovered endowment. Kew focus areas are: Higginsville Line of Lode. 1Moz in top 300m. Negligble testing below.

With the acquistion of DIO, they will have:
- annual production of ~280K oz
- Two 1.2 Mtpa plants
- 1.2M oz, 3.7M resources

They've also got big plans for DIO's tenements. The complete wrap up of DIO is expected to take between 6-8 weeks duration.

So 2 questions:
- Why no rerating of this potential powerhouse?
- Kennas, what's the MC to OZ for this producer incorpating the new DIO oz's?

I'm at a bit of a loss here

 

[JTLP]

Anybody out there...out there...out there

So today Avoca finally managed to break the magical $2 dollar barrier (briefly) hitting 2.03 before settling for the day on 2.00. Volume has been well up lately for this mid tier producer...somebody taking a position perhaps? Maybe with the incorporation of DIO people can see long term value?

Thoughts

 

[JTLP]

So what's been happening in the life of Avoca since the last post?

Today, CBA's holding in AVO was upped. I take this with a grain of salt as they have often chopped and changed their holding in the past year. The price was up today which was nice but again...watching and waiting.

The new Avoca, as they are calling it, has the following:

290M shares on issue
70% register instutional
12M options (management)
A market cap of A$550M ($1.95)
Cash & Cash Equivalents A$28.8M
H12010 Profit - $34M

The reserves and resource base (inclusive of DIO) is now 3.639 Million oz...a nice amount of gold in them hills!

They are targetting 190,000 oz's for the 2010 calender year at cash costs of $452 per oz (net of royalties).

They've also recently had some fantastic hits at Higginsville and Musket. An extract from the Paydirt Conference on Higginsville:
- Outstanding potential for additional exploration discoveries within 2,700km² of underexplored, high-degree tenure. High undiscovered endowment. Kew focus areas are: Higginsville Line of Lode. 1Moz in top 300m. Negligble testing below.

With the acquistion of DIO, they will have:
- annual production of ~280K oz
- Two 1.2 Mtpa plants
- 1.2M oz, 3.7M resources

They've also got big plans for DIO's tenements. The complete wrap up of DIO is expected to take between 6-8 weeks duration.

So 2 questions:
- Why no rerating of this potential powerhouse?
- Kennas, what's the MC to OZ for this producer incorpating the new DIO oz's?

I'm at a bit of a loss here

Anybody out there...out there...out there

So today Avoca finally managed to break the magical $2 dollar barrier (briefly) hitting 2.03 before settling for the day on 2.00. Volume has been well up lately for this mid tier producer...somebody taking a position perhaps? Maybe with the incorporation of DIO people can see long term value?

Thoughts

Talking to myself here and on other threads...ahh well.

AVO struggling to maintain the hold above the $2 mark. Actually closed today on 1.99 with an intraday high of 2.03. Volume is still around the million mark which is nice to see.

I'm hoping when they finalise the t/o of DIO and everything is all systems go they will receive some rerating for getting off without a hitch. In the interim I think AVO is pretty much subject to the gold price and macro eco factors.

Anybody have a cash cost per oz for DIO's processing plant?

 

[kgee]

I see Hartleys have a buy rec. on AVO and that they have a resource upgrade expected next month....not sure if its factored in...maybe they should put in a trading halt like AZM and pump the jump

 

[alfaracing]

JTLP Quote[Talking to myself here and on other threads...ahh well]

Nice rise of late. any one think it will continue at this rate? It will have to pull back a bit?
JTLP I'm listening to you, but I have nothing intelligent to add

 

[JTLP]

JTLP Quote[Talking to myself here and on other threads...ahh well]

Nice rise of late. any one think it will continue at this rate? It will have to pull back a bit?
JTLP I'm listening to you, but I have nothing intelligent to add

Hi alfaracing...no drama...at least you came in here!

I suspect this rating has got to do with gold having a bit of a leg up and people realising the potential value of the AVO/DIO merger. Will be a pretty big producer of gold once everything is finalised. And with a resource upgrade I think we can expect a further rise. I don't think that it has been factored into the SP but we shall see.

Hopefully AVO can sustain this level above $2. Looking at the chart AVO has made significant gains since February but it did top out around this point back in December '09 and fell back to the 1.50 - 1.60 level. Pretty safe buying in that area I guess.

Anybody have a combined cash cost for the new entity?

 

[alfaracing]

Hopefully AVO can sustain this level above $2. Looking at the chart AVO has made significant gains since February but it did top out around this point back in December '09 and fell back to the 1.50 - 1.60 level. Pretty safe buying in that area I guess.

JTLP, I bought a small amount at $1.65 about a month ago. Finally, i feel like i've bought at a good price. I always seem to be buying too late. I put 20K in direct shares March 2007 went well up untill the crash. I,ve been hanging on for the ride, still a long way to getting my money back.


Anyway learning lots and enjoying the market turnaround.

 

[JTLP]

JTLP, I bought a small amount at $1.65 about a month ago. Finally, i feel like i've bought at a good price. I always seem to be buying too late. I put 20K in direct shares March 2007 went well up untill the crash. I,ve been hanging on for the ride, still a long way to getting my money back.


Anyway learning lots and enjoying the market turnaround.

Hi Alfa,

I'd be happy purchasing in that price. It seems like a good entry point for AVO from months gone by. As I said i'd be happy to get in again around there.

AVO has been holding steady and news has come in that all shares for DIO holders have now been issued. I'm suspecting that some have/will get dumped on market for some time but overall AVO should be ok.

News about the upgrade should be due soon and there are a few broker reports on Avoca's website with price targets between 2.25 - 3...take your pick!

There seems to be a question about the LOM (life of mine/mining) for AVO so the recent pick up of DIO is good and an upgrade will be even better. Perhaps they may even sniff out another producer/near term junior?

IGR would make sense for this as like DIO; they have their own plant and cash to get the project into production. Will have to wait and see and I would think AVO might try and get the DIO operation downpat before making another move but you never know (and they might like to see if IGR have the expertise to actually get the project over the line)...

JTLP

 

[JTLP]

http://asx.com.au/asxpdf/20100512/pdf/31q94r95xbnym4.pdf

New announcement out from Avoca - it's a presentation about their operations and the future.

Very very positive read and even with this lingering tax I am very pleased to be holding Avoca. An efficient outfit with very low cash costs (ableit royalties paid to Morgan Stanley provide a bit of an overhang).

Things of note:
- There is a convertible note due in 2012 for $20.4m @ 1.74
- 250,000th ounce produced in March 2010 - Targetting 280k for FY11 and 400,000k for FY13 (this is significant as it is the first mention of such a target).
- Confident of increase producing ounces well beyond 2013
- 4 Producing Mines (2 underground, 2 open pit)
- Fantastic opportunity for further discoveries with very large, lightly explored tenemants.
- Resource upgrade due out this month

I hold

 

[explod]

Yes very pleasing direction all round, in the current climate do not be too surprised to see this go past the all time high soon and hit $3,

However I have been very wrong before so DYOR

this is just my own humble gut feeling based on fundamentals and the current direction of the gold price.