Avanco Resources Limited

AVB Details
a
Strategic Alignment: Up 101.299% on March 27, 2018, Avanco Resources Limited (ASX: AVB) announced that the company has entered into Bid Implementation Deed (“BID”) with OZ Minerals Limited (“OZL”) for a recommended off-market cash and scrip takeover offer by OZ Minerals to acquire all of the issued shares of Avanco for $0.085 cash plus 0.009 OZ Minerals share per Avanco Share. This is subject to a 50.1% minimum acceptance condition and offer consideration values Avanco at $0.17 per share with total equity value of A$418 million.

This offer created greater certainty for Avanco shareholders and pushed the stock higher. Additionally, the composition of cash and scrip offer provides for an immediate crystallization of value with over 50% of the consideration being cash. The balance of consideration is in the form of liquid OZ Minerals shares. The board has recommended the shareholders to accept the offer in the absence of a superior proposal. This acquisition of Avanco would immediately add to OZ Minerals’ copper production profile and provides expansion options in the highly prospective Carajas copper region and Gurupi gold belt in Brazil.

Further, OZ Minerals’ Board believes that the combination of OZ Minerals’ healthy financial position and Avanco’ suite of high grade and high growth assets will be overwhelming for shareholders of OZ Minerals. The objective of this deal is to become a multi-asset, copper-core and global mining company. This acquisition will provide potential organic growth to seven mines (i.e., Prominent Mines, Carrapateena, West Musgrave, Antas, CentroGold, Pedra Branca and Pantera) in the next six years. Further, the transaction is expected to be earning accretive for OZ Minerals shareholder by year two.
 

Strategic Rationale (Source: Company Reports)
 
Meanwhile, AVB updated that Contact Resource grade has exceeded 3g/t gold level. Based on the foregoing development, we believe that investors can book profits looking at the current price surge and the offer price. We give a “Sell” recommendation on the stock at the current price of $0.155
 

AVB Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.