Minsite...Shareholders have not capitulated

Bit old but I like the last paragraph.

http://minesite.com/news/norton-gold-fields-ups-its-offer-for-bullabulling-moderately

Norton Gold Fields Ups Its Offer For Bullabulling, Moderately
17 Jun 2014

On Monday, Norton Gold Fields conditionally upped its offer to purchase fellow Australian miner Bullabulling Gold from A7 cents per share to A8 cents per share after facing resistance from Bullabulling’s management team.

In response to the original offer, the Bullabulling team recommended that shareholders reject the deal, arguing that the price did not reflect the value of the flagship Bullabulling project in Western Australia.

The Bullabulling project is located to the south west of the gold mining town of Kalgoorlie, Western Australia. The 131 square kilometre project is well served by roads, power and water, and has no issues over native title claims. More to the point, it has a JORC-compliant resource of 114 million tonnes of material running at a grade of 1.02 grams per tonne gold for a total of 3.753 million ounces of gold.

Bullabulling intends to develop its first mine based around that resource, producing at a rate of 200,000 ounces of gold per year though. It’s possible though that the geology could likely support a larger operation if exploration continues to define new ounces within the highly prospective Bullabulling and Gibraltar trends.

If the company remains independent, Bullabulling expects to achieve first production in 2015.

But it might not be that simple. Backed by Chinese money, Norton has been circling the wagons for some time now. Its previous offer has now been conditionally increased to A$0.08 per share on the proviso that it receives sufficient shares to increase its stake in Bullabulling to at least 30 per cent by the 30th of June 2014.

At present, Norton holds a stake of approximately 16 per cent in Bullabulling.

If the 30 per cent requirement is not achieved, the Norton offer will remain at the A$0.07 level as previously announced. What’s more, Norton has stated that this conditional update represents its final offer and that a higher price will not be tendered.

Bullabulling’s team is unmoved by that argument. Using the conclusions of an independent expert who valued Bullabulling’s shares at between A$0.111 and A$0.161, with a preferred value of A$0.146 to support their position, they have reaffirmed their stance that the Norton Gold Fields’ offer remains “inadequate and opportunistic”.

Consequently, Bullabulling’s management have recommended that shareholders reject the offer and remain true to the vision of developing the mine in-house.

Bullabulling’s share price gained more than eight per cent on Monday to A$0.077 on the ASX. That’s still below the increased bid price, meaning that the market at this stage still has doubts as to whether it will go through.

Put another way, as one influential commentator pointed out in a newsletter earlier this week, it means that Bullabulling’s shareholders have not capitulated in spite of poor market conditions and the company’s prevailing low share price. Whether that means the period of capitulation in the wider market is now over remains to be seen.

PS Should get assay results v.soon.