The board of Larvotto Resources Ltd (ASX: LRV) has rejected a takeover bid from United States Antimony Corp (NYSEMKT: UAMY), saying the offer materially undervalues the company.
Shares in Larvotto hit a new record high earlier this month when USAC unveiled its bid, which was offering six of its shares for every 100 Larvotto shares. USAC said at the time this equated to $1.40 per Larvotto share.
Larvotto shares hit a high of $1.44 on the news but have been trending downwards in recent sessions, closing Friday's trade at $1.16.
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Bid is way too low
The Australian company stated in a release to the ASX on Monday that its board had considered the USAC bid and recommended that shareholders reject it.
The company said in its statement:
After considering the offer in detail and taking into account the advice of our independent advisers, Larvotto's board of directors unanimously formed the view that the offer materially undervalues Larvotto and has informed USAC accordingly.
The board said USAC shares had fallen since the bid was announced, and as of Friday last week, the bid value had fallen to about $1.11 per Larvotto share.
New mine the focus
Larvotto said it remained focused on progressing its Hillgrove antimony and gold project, which was on track for first production in 2026.
The company released a definitive feasibility study for the Hillgrove project in New South Wales earlier this year, which indicated it would produce about 7% of the world's antimony requirements once it was up and running.
Larvotto chair Mark Tomlinson said on Monday that the board was confident "that Larvotto's intrinsic value and long-term growth potential significantly exceed the indicative value implied by the offer''.
He went on to say:
Hillgrove is a high-grade, near-term production project and is now fully funded following recent debt and equity initiatives undertaken by Larvotto. Hillgrove also has substantial exploration upside with the potential to extend mine life and generate strong revenues for many years to come.
Mr Tomlinson said the project would pay back its capital cost "within months of first production, positioning Larvotto to deliver sustained profitability and long-term value for our shareholders''.
USAC said in its statement when launching the takeover bid earlier this month that there were "exceptionally strong" strategic and financial benefits in bringing the two companies together.
USAC was intending to set up a listing of its shares on the ASX to allow Larvotto shareholders to continue to trade their stock once the takeover was complete.
