The Gascoyne Resources Ltd (ASX: GCY) share price closed Wednesday's trading session 9.52% lower at 38 cents a share.
The gold miner's shares were on the move today after the company's board rejected a takeover bid from Westgold Resources Ltd (ASX: WGX).
Here's what we know.
What was announced?
Gascoyne's board unanimously recommended shareholders reject an offer made by Westgold around 2 weeks ago.
The company's major 22% shareholder, Deutsche Balaton AG1, also recommended fellow shareholders reject the proposal.
For a bit of background, Westgold announced its intention for an unsolicited, conditional, and off-market takeover of all of Gascoyne's shares on 30 September.
Gascoyne shares soared 21% higher on the day of the announcement.
However, Gascoyne and ASX minerals explorer Firefly Resources Ltd (ASX: FFR) agreed to merge back in June. As such, the company "remains committed to the proposed Scheme of Arrangement with Firefly".
Today, Gascoyne outlined its "enhanced business plan". In it, it states its hopes to see a significant improvement in cashflows by reducing capital investment in FY22 and FY23.
This, it says, will be achieved by "postponement of the Stage 3 cut-back of the eastern and western walls of the Gilbey's pit".
The announcement notes Gascoyne came to the decision after identifying a "pathway to increase free cash flow based on enhanced future operational flexibility" and amid higher operating costs in WA.
Gascoyne also adds that it is in a fairly robust financial position with $40.1 million in available liquidity as of 30 September.
Consequently, the gold miner also reiterated its FY22 production guidance of 70-80koz "at a significantly lower All-in Cost following the removal of (approximately) $60M waste stripping from the deferred cut-back".
Speaking on the announcement, Gascoyne CEO Richard Hay said:
Gascoyne's decision to defer the Stage 3 eastern and western wall cut-back of the Gilbey's pit will greatly increase cash generation from Dalgaranga and Melville over the next three years and protect the business against avoidable financial risk in the current environment. We have been able to take this pathway by capitalising on the operational flexibility emerging from the proposed merger with Firefly and exploration success within our Dalgaranga tenements.
Touching on the board's recommendation, Hay added:
While we still await the Bidder's Statement from Westgold to support its intention to make a takeover offer for Gascoyne, the Board is of the view that the Offer does not represent a superior alternative to the proposed merger with Firefly. The Board firmly believes that Gascoyne combined with Firefly provides greater value to shareholders than the individual parts. Also, our major 22% shareholder Deutsche Balaton AG has stated that, it does not intend to accept the Westgold Offer in the absence of a superior proposal. Accordingly, Gascoyne shareholders are advised to take no action in response to correspondence from Westgold and to REJECT the Westgold Offer.
Gascoyne share price snapshot
The Gascoyne share price has had a difficult year to date, having slumped 10% into the red since January 1.
Despite this, it has soared over 887% in the last 12 months, well ahead of the S&P/ASX 200 Index (ASX: XJO)'s return of around 20% in that time.
