Australian gold explorer Gascoyne Resources Ltd on Wednesday recommended its shareholders turn down a takeover bid by Westgold Resources Ltd, saying it remained committed to its merger plans with Firefly Resources Ltd.
Shares of Gascoyne dropped as much as 20% following the news before recouping some of the losses to trade nearly 11% lower by 0247 GMT. Westgold shares were marginally higher, while Firefly Resources was on a trading halt pending an announcement.
“The board is of the view that the offer (from Westgold) does not represent a superior alternative to the proposed merger with Firefly,” Gascoyne said in a statement.
Last week, Westgold had said it received positive engagement from Gascoyne shareholders for its A$104.8 million ($76.94 million) takeover offer.
Westgold last month offered to buy Gascoyne for A$0.4175 per share, a premium of 34.7% to the stock’s closing price on Sept. 29, a day before the proposal was made.
Westgold and Firefly did not immediately respond to Reuters request for comment.
Earlier this year, Gascoyne had said it intended to acquire Firefly in a deal that would combine the assets of the two companies in the Murchison region of Western Australia.
Gascyone had said shareholders of both companies would benefit from the A$44.7 million merger, which could see an integration of Firefly’s Yalgoo gold project into its Dalgaranga production plan in Western Australia.
($1 = 1.3620 Australian dollars)
(By Harish Sridharan; Editing by Subhranshu Sahu)