DIO - Dioro Exploration

[JTLP]

As a holder of AVO i'm a little perplexed.

They recently raised capital for a paste plant or whatever (sorry been working and can't remember) and now they are chasing other companies. They haven't even officially come out with a cash cost per ounce yet (i did e-mail the MD and he did reply but i'm still skeptical until we see some concrete evidence) and to add another company into the mix will cost money (although they state this synergy will provide lots of $$$ saving benefits).

I suppose a positive is that AVO are targeting a producer and their resource base will increase dramatically. What are DIO's costs per oz etc?

Hopefully gold stays at a nice level in terms of AUD and I can hold these for the L/T (NCM? one can dream...)

 

[eddyeagle]

As a long term holder of DIO, I will be filthy if the takeover goes through at this price.

From memory, Fat Prophets recommended this stock at around 15c back in 2007, before DIO had their 1:14 share re-structure. So a buy-in price of 15c was equal to a share price of $2.10 today.

So the takeover price of 53 cents is around 25% of what I paid for this spud!

 

[Rico]

As a long term holder of DIO, I will be filthy if the takeover goes through at this price.

From memory, Fat Prophets recommended this stock at around 15c back in 2007, before DIO had their 1:14 share re-structure. So a buy-in price of 15c was equal to a share price of $2.10 today.

So the takeover price of 53 cents is around 25% of what I paid for this spud!

I should investigate further, but I think Fat Prophets have (or had) a vested interest in Dioro. They were plugging it so hard for so long. They either got completely sucked in and screwed up there analysis, or there was something dodgey going on. Either way, it does damage their reputation in my books.

 

[happytown]

dioro has released an ann stating that their principal financier (bnp paribas) has granted a time extension for their exisiting debt facility (out now to 31 march 2010)

sp currently down .015 to .645 on minimal volume

cheers

 

[eddyeagle]

Dioro has moved quite sharply up to 79c from the lows of 25c.

They have said to REJECT the takeover offer from Avoca.

Glad i held onto this one in the painful times! Things can change quite quickly!

 

[JTLP]

This isn't meant to sound like a downramp but:

DIO + KPMG = joke.

KPMG (Dioro's Auditors) value Dioro at $1.88 per share, a premium of 376% to the pre-ann price for Dioro. The market valued Dioro at 39.5 cents per share prior to AVO's takeover offer...surely there can not be such a discrepancy between the 2?

AVO are currently analyzing KMPG's statement but from reading the 1 page ann they seem fairly unimpressed with KPMG and Dioro's tactics. You could never expect to attain full value placed on the shares and AVO already placed a hefty premium on DIO's closing price. Also interesting to note a passage from KPMG's auditors notes:

KPMG, in their report, state that “in Australia, successful transactions are typically likely to complete within an acquisition premium range of 25 percent to 40 percent.” The premia offered by Avoca as set out in its Bidder’s Statement (using pre-announcement prices for both Avoca and Dioro shares) range from 34.2% to 58.2%.

KPMG’s preferred value of $1.88 implies a premium of 376% to the pre-announcement price for Dioro.

I can see this takeover being a bit longwinded and drawn out sadly...

 

[drillinto]

Dioro (DIO) & Gold sector
Source: www.minesite.com
31 May 2009

Minews. Let’s start with gold because it really is starting to show its best as an inflation and paper-currency hedge.

Oz. It certainly is, and that produced a number of strong performers among smaller gold stocks, but not a lot from the leaders. Silver Lake (SLR) was a star as investors started to understand the expansion plans and high-grade focus of the business. It added A14 cents over the week to close at a 12-month high of A70.5 cents, with A10.5 cents of that rise coming in active Friday trade.
Takeover target Dioro (DIO) was another stock in strong demand as it launched its defence against Avoca (AVO). An expert’s report arguing that the all-shares offer which valued Dioro at A60.6 cents when launched was a country mile below Dioro’s real value of around A$1.88. That discrepancy saw Dioro add A16 cents to A79.5 cents. Interestingly, Avoca also rose, adding add A7c to A$1.80.

Minews. That value gap between the market and the expert report is enormous. What’s the explanation?

Oz. None really, just that the accountants at KPMG who wrote the expert report are saying the market is wrong. They’ve looked at the production and resource numbers under-pinning Dioro and determined that the company is worth between A$1.40 a share and A$2.28 with the mid-point being A$1.88, more than double what the market reckons. It is possible that a strict accounting view of a gold company’s value is out of step with a stock market in recovery mode, but that gap is so wide that it does have the potential to cause investors to take a fresh look at the entire gold sector.

 

[JTLP]

Thanks for that.

AVO rose alongside DIO as AVO now holds a decent chunk in DIO from memory.

Still can't get over that discrepancy by KPMG and the market. Seriously who are they kidding. Accept the offer and make a force in W.A.

 

[eddyeagle]

Increased offer today:

To 1 Avoca Share for every 2.4 Dioro Shares, valuing each Dioro Share at 74.8 cents per share1;

Avoca’s increased Offer represents a premium of over 89% to the 39.5 cent closing price of Dioro Shares on 9 April 2009 (the trading day prior to the announcement of the Offer)1 and a premium of 19% to the 63 cent closing price of Dioro shares on 3 July 2009, the last trading day prior to announcement of the increase.

 

[eddyeagle]

Sydney - Monday - July 20: (RWE Aust Business News) - Dioro Exploration NL (DIO) has announced that it is currently engaged in advanced discussions with Northgate Minerals Corporation regarding a potential material transaction.

The Board of Dioro is of the view that the proposed transaction, if completed on the terms currently being contemplated is likely to be a superior transaction in value to the current offer from Avoca Resources Ltd (AVO).

Directors said details of the proposed transaction are likely to be announced within one week.

They reconfirmed their previous recommendation that Dioro shareholders should reject the current Avoca offer, which was extended until July 28 after Avoca confirmed it has received acceptances for only 2.71 per cent of Dioro shares since it opened its offer in May.

 

[eddyeagle]

Quite an interesting / entertaining few days for Dioro!

Firstly - DIO goes into a trading halt.

Then - Avoca release this:

Avoca extends Offer period due to
questionable Dioro tactics
As you may be aware, Dioro Exploration NL (“Dioro”) has announced a trading halt pending release of a reserves increase for the Frog’s Leg gold project, owned 49% by Dioro.
The trading halt, which was announced on Friday afternoon, is required to be lifted on or before Tuesday 21 July 2009, the same day that the offer by Avoca Resources Limited (“Avoca”) (ASX:AVO) for all Dioro shares had been scheduled to close.
In Avoca’s view, Dioro’s trading halt:
•
may be an attempt by Dioro to discourage acceptances under Avoca’s offer; and
•
is unnecessary because Dioro, in its Target’s Statement released to the ASX on 28 May 2009, has already disclosed to the market an increased Frog’s Leg reserve of 489,745 ounces.



Then DIORO come back stating that their ore reserves at FL have increased by 45%!!!

Then they announce that they are currently engaged in advanced discussions with Northgate Minerals Corporation regarding a potential material transaction.


Great stuff! Hopefully the share-prices gets a further boost tomorrow!

 

[Miner]

DIO has suddenly became eye catchers for many gold miners : RMS and AVO.

surprisingly the market price of DIO is not catching up though both RMS and AVO have valued this share as more than $1.

Also I do not see enough postings on this thread either

I have two queries and appreciate if some one could please assist.

If RMS is offering to buy DIO then what happens to those who already accepted the offer from AVO ?

Next question : what happens if Joe Blogg buys DIO straight from market at 83 cents and then sell it back to AVO or RMS at $1. I am sure they are not stupid or the situation is not simple for every one to make 20 % on a sunny day. Why DIO is not calling trading halt ?

Disclaimer : I previously held DIO (sold them) and bought DIO on Friday again

 

[arms]

Once the offer from AVO was made unconditional, if you excepted that was it there was no pulling out of that acceptance, AVO now own your shares.

The share price at this stage reflects the one firm offer, AVO, and the share price settled roughly at the offer price.

At this stage RMS has said that it will be making the offer but no documents have been forthcoming and DIO holders have no way of accepting. I think once they firm it up, probably Monday the share price will reflect better pricing. I think RMS wanted to get their intentions known so AVO stopped getting to much of the company.

A long way to go in this, will AVO come back and match the latest offer and what will DIO directors say about it all.

 

[SilverRanger]

Looking at the closing prices on Friday (DIO: 0.83, AVO: 1.74 and RMS: 0.5), the market has priced it in as a gamble with 20% upside with 30% implied probability vs 9% downside with 70% implied probability, the odds will probably change on Monday though

 

[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.

 

[SM Junkie]

Guess Avoca's final bid was not the final bid after all. Much more attractive offer with $0.65 in cash; and 0.325 Avoca shares., we will see what the DIO board says now. Glad I didn't take up the offer earlier.