‘Take no action’ Dampier tells shareholders
ASX-listed Dampier Gold has urged shareholders not to take any action in relation to the conditional scrip takeover offer from joint venture (JV) partner Vango Mining, arguing that the timing of the bid is a direct response to an unresolved dispute between the two companies over the K2 gold mine project.
The company said that it had received the bidder’s statement and that it was preparing a target statement, which would set out its formal recommendation.
Dampier also said that Vango “consistently demonstrated material financial uncertainty”, noting that at December 31, the company had total current assets of $1.13-million, $7.7-million in current liabilities, $13.7-million in total liabilities and an additional $1.1-million contingent liability.
The takeover target also pointed out that Vango’s cash position at June 30 was $36 000 and said that auditors had raised uncertainty about the company’s going concern status in the half-year results.
Dampier also seemed unimpressed by Vango’s proposed plan to improve its financial position. This includes converting $5.4-million of unsecured debt owed to directors and third-parties to equity and the issuing of a further $2.5-million convertible notes to a substantial shareholder.
“Even after these measures, it is unclear whether or not Vango will have the financial resources to meet its obligations, overheads and exploration commitments without a further near-term capital raising, which represents a risk of further dilution to all Vango shareholders,” Dampier said.
The firm further noted that Dampier shareholders would represent only 4.84% of Vango’s expanded share capital and not about 7% as announced by Vango.
On Monday, Vango announced an all-scrip offmarket takeover offer for Dampier Gold, valuing the explorer and developer at 5.6c a share. The offer is a near 87% premium on Dampier’s share price on Friday and also 98% above the company’s one-month volume weighted average price of the shares.
Vango, which is developing the Plutonic Dome gold project in which Dampier is earning a 50% interest, said shareholders accepting the offer would benefit from the increased liquidity and scale of Vango, as well as the recent exploration success at Plutonic.
Shareholders holding 12.63% of Dampier Gold’s shares have agreed to accept the offer in pre-bid acceptance agreements, which the suitor sees as an endorsement of the merits of its offer.
Vango and Dampier have a shared history in the Plutonic Dome gold project, in Western Australia. Dampier in 2010 acquired the Plutonic Dome Gold Project from Barrick Gold, and three years later entered into a farm-in and JV agreement with Vango Mining, then Ord River, whereby it agreed to sell down its interest. The following year, a new board determined that Dampier was unable to secure funding for its residual share in the project and elected to sell its 40% stake to Vango for $8.2-million.
Following the sale, the companies in May last year agreed to a farm-in JV, whereby Dampier was granted the right to earn 50% of the K2 project M52/183 for the capped expenditure of up to $3-million.
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