AOR apollo series 2013-1 trust

Fatprophets strongly reject offer

  1. 4,330 Posts.
    1OOn Monday morning Canadian based Placer Dome
    (PDG – NYSE code) launched a takeover bid for
    AurionGold (AOR), with the offer valuing the company at
    $4.51 per share. The bid is not surprising in our opinion,
    given that Australian gold stocks continue to be valued on
    lower price earning multiples than their North American
    counterparts. Additionally, the low value of the Australian
    dollar has effectively made domestic gold producers
    tempting targets for offshore predators. Already a number of
    companies, including Australia’s largest gold producer
    Normandy, have fallen into overseas hands, and we view
    this trend as being likely to continue.
    Placer Dome Inc is one of the world's largest gold mining
    companies with major mining operations in Canada, the
    United States, Australia, Papua New Guinea, South Africa
    and Chile. The company’s strategy is to grow organically
    and through acquisition, hence the takeover bid for Aurion.
    We believe that if successful, the takeover will benefit all
    shareholders in creating a larger and more efficient gold
    mining company with a diversified asset base. At this stage
    however, we strongly recommend that Placer Dome’s
    takeover offer not be accepted
    . In our opinion, there is a
    high probability that another bid could emerge from a third
    party.
    In the event of another offer emerging, it is probable
    that Placer Dome would then increase their offer. We
    believe that the best strategy at this point is to continue
    holding Aurion for the time being.
    The takeover has propelled Aurion to a record high of $4.62,
    and with an uptrend now firmly established, further gains are
    possible in our view. Not surprisingly, as depicted in the
    smaller chart, Placer Dome has endured a lengthy bear
    market along with the rest of the gold sector. Between 1996
    and 2000, PDG fell 73 percent
    issue 83 May 28th 2002
    ...continued over page
    DAILY CHART
    2001 - 2002
    Rising trendline
    Fat Prophets
    stay with AOR
    Placer Dome
    1987 - 2002
    "The takeover has
    propelled Aurion to a
    record high of $4.62, and
    with an uptrend now firmly
    established, further gains
    are possible in our view."
    Hold AOR
    medium term “specialty dish”
    AurionGold
    medium risk
    to hit an eight year low of C$11.10 (Canadian dollars) in
    October 2000. Along with the global gold sector, Placer has
    since started to recover after establishing a solid support
    base between C$11 and C$12. However, the current share
    price of C$22 is still well below the mid 1990s high of C$42.
    Placer Dome is seeking to enhance its mine and exploration
    portfolio in the Kalgoorlie and Laverton regions, and derive
    benefits from cost saving synergies between the two
    companies. In our opinion, the existing mining operations
    and assets of AurionGold make a logical fit with Placer
    Dome's asset base. If the takeover proceeds, Aurion
    shareholders will own approximately 19 per cent of the
    enlarged company.
    Under the terms of the offer, Placer Dome is offering 17.5 of
    its own shares for every 100 Aurion Gold Shares. The offer
    effectively values Aurion at $4.51 a share, or just under $2
    billion (based on a 24 May 2002 closing price for Placer
    Dome Shares of US$14.27, and an exchange rate of
    US$0.5539). Placer Dome is making an application to the
    Australian Stock Exchange to establish a facility for the issue
    of Placer Dome CDI’s. The takeover offer is conditional on
    Placer Dome achieving acceptances of 50.1 percent.
    Further information on AurionGold is available in issues 66
    and 50 from the Fat Prophets Members Archive
    (www.fatprophets.com.au) Other stocks featured in this issue
    are Caltex Australia (CTX), Ridley Corporation (RIC) Auspine
    (ANE) and Craine Group (CRG).
 
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