Westgold Resources has been left puzzled by Gascoyne Resources’ rejection of its takeover offer after the Australian Takeovers Panel received an application about the potential buyout.
Gascoyne is in the process of entering a merger with Firefly Resources and has recommended that its shareholders reject the offer from Westgold.
The company stated its proposed business plan was set to be shaped by the integration of Firefly’s Yalgoo assets with Gascoyne’s Dalgaranga mine in Western Australia.
It also includes a stage three cut-back of the Gilbey’s pit at Dalgaranga, which includes an investment of more than $150 million over two years.
Westgold announced its off-market takeover in September, which comprises one Westgold share per four Gascoyne shares at a value of $0.44 per Gascoyne share.
“This is the most tangible evidence we have been able to provide to date of the significant long-term value we see from the Firefly merger,” Gascoyne stated.
“As time progresses and we are able to progress technical studies to integrate the Yalgoo assets, we expect to be able to derive and explicitly communicate substantial further value stemming from the combination of our two companies.”
Gascoyne wanted to complete a full assessment of Westgold’s offer before commenting.
“By way of summary, we believe the offer from Westgold inadequately compensates Gascoyne shareholders in seeking to gain control of Gascoyne’s mineral resources, ore reserves and processing infrastructure,” Gascoyne stated.
“It is also an inferior pathway for Gascoyne shareholders when compared to the new business plan.
“Westgold has made a lot of noise since it announced its intention to make an offer for your company and as Gascoyne shareholders you should have no doubt that Westgold is only acting in the interests of its own shareholders.”
Westgold, which submitted the application to the Takeovers Panel over the potential acquisition, has encouraged Gascoyne shareholders to demand the company’s board accepts its offer.
The panel stated that Westgold’s offer would stop the Firefly merger from proceeding.
Westgold executive director Wayne Bramwell said the $150 million capital cost for the stage three Gilbey’s cut-back had not been previously disclosed by Gascoyne’s board.
“It must be alarming for all Gascoyne shareholders, operating team and contractors that within 12 months of coming out of voluntary administration, the Gascoyne board has decided to hurriedly adopt yet another ‘new’ business plan for Dalgaranga,” Bramwell said.
“Westgold’s preliminary assessment of the ‘new’ plan is that it has many moving parts, and the execution risk is very high. It is very reminiscent of the board strategy that previously resulted in Gascoyne being put into voluntary administration and is a disingenuous representation depicting a deferral of critical operating capital at Dalgaranga as a cost saving.
“Westgold’s plan is to keep Dalgaranga running at full capacity, managed by the current Gascoyne operating team, and increase gold output by supplementing the ore feed with higher-grade ore from our Cue mines.”