Proactive Investors - Run By Investors For Investors

Alto Metals directors outline recommended rejection of Middle Island Resources’ takeover bid

The directors’ target statement formally outlined reasons to reject the proposed buyer’s bid.
Sandstone Gold Project on a WA map
Sandstone is about 630 kilometres northeast of Perth

Alto Metals Ltd’s (ASX:AME) board has recommended its investors reject an off-market takeover offer put forward to its shareholders by Middle Island Resources Ltd (ASX:MDI).

The Western Australian target, which has the Sandstone Gold Project in WA as its flagship project, is chaired by shareholder and minerals chemist, entrepreneur Terry Wheeler.

Alto recently raised $2.6 million to fast-track its key asset in WA northeast of Perth.

READ: Alto Metals will use $2.6 million to fast-track drilling at Sandstone Gold Project

Middle Island offered shareholders five shares in its company for every one Alto share held.

Alto chairman Wheeler outlined reasons for the directors’ unanimous rejection of the bid in a letter to the company’s shareholders published yesterday.

Wheeler said the board believed the offer was “highly conditional and uncertain” and “likely to be Middle Island’s first move”, highlighting “there may be tax implications” for offer acceptance.

READ: Alto Metals board recommends shareholders reject Middle Island offer

Among the directors’ reasons for recommending a no-thanks to the offer was their belief: “the offer fails to recognise Alto’s unrealised potential” and “Middle Island needs Alto, however Middle Island’s proposal offers little benefit to Alto shareholders”.

The chairman flagged the company’s three largest shareholders do not plan to accept the offer.

In January 2019, Wheeler was the company’s biggest investor.

BIG PICTURE: Alto Metals targets 500,000 gold ounces at Sandstone in 2019 enroute to 1+ million

Wheeler wrote to shareholders: “Your directors believe that the offer is fundamentally opportunistic and timed to suit MDI’s best interests without reference to the inherent value of Alto or to the Sandstone Gold Project and the 818 square kilometres of the historic Archaean sandstone goldfield controlled by Alto.

“MDI’s offer is designed to secure early control of these assets and capture value that we believe would otherwise flow to you.

“Your directors believe that the offer does not reflect the short, medium and long-term unrealised potential that Alto offers you.

“Your directors urge you not to dilute your exposure to that value by prematurely passing control of Alto to MDI at a price that does not adequately reflect Alto’s unrealised potential.”

The directors recommended shareholders take no action.

 

View full AME profile View Profile

Alto Metals Ltd Timeline

Related Articles

Dr James Searle speaks to Proactive Investors
May 03 2019
The study is expected in the June half of 2020 and will be based on another resource update.
West Musgrave project in Western Australia on a map
April 18 2019
JV partners CZI and Oz Minerals aim to confirm the West Musgrave project's potential with a Nebo-Babel PFS.
Potash
March 05 2019
The company’s $5.3 million rights issue to fund completion of its DFS closes this week.

© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use