2009-07-15 Dioro Exploration NL says it is in talks with third parties regarding a potential takeover bid to rival Avoca Resources Ltd's improved hostile offer, which it has rejected.
Shares in Dioro had risen four cents, or 5.97 per cent, to 71 cents at 1201 AEST while Avoca shares were up three cents, or 1.75 per cent, at $1.74.
Dioro on Wednesday said it was in "meaningful discussions with third-parties" and advised its investors to reject Avoca's all-scrip offer, saying it was opportunistic and not in the best interest of shareholders.
"An evaluation of all available materials surrounding the bid, by both the company and its advisors, has confirmed the boards belief that the bid is not in the best interest of shareholders," Dioro said in a statement on Wednesday.
"Should the bid be successful, the merged entity will be exposed to significant debt levels."
Avoca said in its March quarter report that its lending arrangement stood at $66 million at the end of the period, while Dioro said last month that it had drawn $9 million from a $10 million debt facility at the end of May.
Analysts recently said there was little chance a rival bid for Dioro would be forthcoming before Avoca's offer closes on Tuesday July 21, but urged Dioro shareholders to wait until the eleventh hour to accept - just in case.
Potential suitors include neighbouring gold miners in Western Australia's Kalgoorlie region, Focus Minerals Ltd and Silver Lake Resources Ltd, although Dioro's joint venture partner, Canada's La Mancha Resources Ltd, is the most likely candidate.
Avoca's bid for the fellow gold miner has gained little traction since being launched on April 14 and opened on May 19.
Avoca upped its offer from one of its shares for every 2.82 Dioro shares held to one Avoca share for every 2.4 Dioro shares last Monday, July 6.
Around the time they were announced, the original offer valued Dioro at about $49 million while the revised bid was worth about $68.5 million.
Avoca then declared the bid unconditional on Monday, July 13.
Pre-bid acceptances were received by Dioro's two largest shareholders, South Africa's Harmony Gold and UK-based Baker Steel Capital Managers, giving Avoca a 14.95 per cent interest Dioro.
But Dioro claimed on Wednesday that fewer than one per cent of Dioro shareholders had accepted the bid so far.
Comment was being sought from Dioro managing director Rhod (Rhod) Grivas.
