Vancouver — Rio Tinto’s (RTP-N) sale of a 14.9% stake in Aurora Gold has paved the way for an Australian-based venture capital firm to take a run at the Perth-based junior gold miner.
Tomorrow Ltd., 84% owned by Sir Ron Brierley’s Guinness Peat Group, bought the interest at A10 per share. The company has followed up the acquisition by bidding for the rest of Aurora at the same price.
The A$16-million unsolicited offer, was described by Aurora as “demonstrably inadequate”. The company has A$26 million in its kitty and claims to have a value of at least A16.5 per share. “It (the offer) does not reflect the underlying value of Aurora shares,” said Aurora chairman Rory Argyle.
Aurora’s sole operation, the Mt Muro gold-silver mine in Indonesia is slated to close in 2002. However, the junior is moving to develop the Morobe gold project in Papua New Guinea.
“For some time now, Aurora’s share price has been suffering from a substantial overhang in the market because Rio has been known to be looking for an exit for its 35% shareholding,” added Argyle.”It would appear, given the size of Rio, that the objective of exiting from Aurora has outweighed the need to secure a price that reflects underlying value.”
Rio Tinto still holds a 19.9% interest in Aurora having acquired a 35% stake in the junior through the US$418-million takeover of Australia’s Ashton Mining. The acquisition of Ashton allowed Rio to consolidate its ownership of the Argyle diamond mine, increasing its interest to 99.8%, and ensure independent, single-stream marketing of all of Argyle’s diamonds.
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