Combining gold with gold

Mid-tier Australian gold producer Avoca Resources looks to expand its operations.

Mid-tier Australian gold producer Avoca Resources has announced it will make an off-market scrip takeover offer for all of the issued shares in Dioro Exploration.

The deal will see an offer of one Avoca share for every 2.82 Dioro Exploration shares, which values Dioro at $0.53 per share.

The combination of Avoca and Dioro would create a gold producer with three WA gold mining operations, Higginsville, Frog’s Leg and South Kalgoorlie.

According to Avoca, the three operations would produce an estimated 250,000 ounces per annum in the financial year 2010 and create a combined resource base of approximately 4,000,000 ounces.

The deal with Avoca will mean that Dioro will be exposed to markets they may otherwise miss out on, Avoca managing director Rohan Williams said.

“Not only are Dioro shareholders being offered a significant premium, they will also gain exposure to a larger gold company that is listed in the ASX 200 and enjoys strong institutional support,” he said.

“Avoca’s board is confident that putting the Avoca assets together with the Dioro assets and potentially realising the upside offered by the Combined Group will be a dramatic value driver for the shareholders of Dioro and also Avoca.”

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