Ramelius Resources has conceded defeat in the takeover war for Dioro Exploration, after agreeing to sell its stake to rival bidder Avoca Resources.
Ramelius had only closed its own offer for Dioro earlier this week, acquiring a total of 34,352,544 ordinary shares or 37.51% of the company.
The move means that Avoca will now have a clear majority stake in Dioro, with a holding of at least 85.56% when its latest offer closes on 2 March.
Ramelius originally opened its bid in July last year and has extended it several times since.
However, the Dioro board has largely favoured Avoca’s two separate bids and encouraged its shareholders accordingly.
Avoca’s first offer closed on 19 August last year, with the company taking a 44.85% stake.
However, the company launched a second bid on 28 January in order to claim the remaining shares needed for a majority stake.
Prior to the Ramelius announcement today, Avoca confirmed it had increased this 48.05%.
In exchange for the Dioro shares, Ramelius expects to receive $46 million cash and 11.6 million Avoca shares.
According to a statement from Ramelius, the board reached the decision after taking into account the risks associated with a minority holding in Dioro
“There is a significant risk we may not receive cash flows from Dioro’s assets and a high probability that Dioro’s share price will fall after the close of the Avoca offer,” the company said.
Ramelius chairman Robert Kennedy said the transaction would increase the company’s capacity to participate in new opportunities that would deliver future growth and significant returns.
Avoca chairman Robert Reynolds said the concession was an excellent result for its shareholders.
“Avoca’s aim is to now reach an acceptance level of 90%, so it can fully complete the takeover of Dioro,” he said.
“The sooner this is achieved, the sooner Avoca will be able to unlock the value inherent in the combination of the two organisations.
“I am delighted to welcome all new shareholders to the company at what is a truly exciting time.
“The new Avoca will have a dominant position in Australia’s premier gold belt with multiple mines feeding two processing plants expected to produce over 270,000 ounces of gold per annum.”