The independent directors of Dioro Exploration have this morning urged shareholders to reject Ramelius Resources’ acquisition bid, after it was approved yesterday by the Foreign Investment Review Board (FIRB).
The move is another twist in the long-running negotiations between Dioro, Ramelius and Avoca Resources.
In a target statement, Dioro directors said the merger was unlikely to succeed, Dioro’s gold assets were more valuable than Ramelius’ and shareholders would lose an entitlement to Capital Gains Tax rollover relief.
The directors also said the company was achieving record production results.
Ramelius had required FIRB approval for the Dioro acquisition because a Canadian gold fund holds an interest of approximately 19% in Ramelius.
“The approval is now unconditional and may be accepted by Dioro shareholders at anytime up to Monday, 12th October, 2009, unless the closing date is extended,” the company said.
Avoca managing director Rohan Williams yesterday told MINING DAILY the approval was expected.
“The next step for everyone is to see what the Ramelius bid closes at,” he said.
“Our bid has closed at 44.85%, so we will have to wait and see what Ramelius ends up with and then work out how Dioro will be best managed after that.
“We have three directors on the board and they may want representation as well, depending on what they end up with.”
On 29 July the directors recommended an offer of one Avoca share for every 2.3 Dioro shares in the absence of a superior proposal.
However, the next day Ramelius announced its own takeover intentions, so the directors recommended shareholders take no action.
Avoca closed its offer on 19 August before Ramelius’ bid had actually opened, finishing with a 44.85% stake to become Dioro’s major shareholder.
As a result, three Avoca directors, including Williams, were appointed to the Dioro board, increasing the number of directors to seven.