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MENAFN - ProactiveInvestors - Australia - 24/12/2012

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(MENAFN - ProactiveInvestors - Australia) Avocet Resources (ASX: AYE) plans to merge with Lion One Metals with the execution of a deal at a substantial premium, that values Avocet at A7.6 million.

Significantly, the merged entity will have a market capitalisation of C35 million and cash in hand of around C18 million.

The two companies have entered into a merger implementation agreement under which Lion One is offering one share for every 9.5 Avocet shares held.

Based on the closing price of Lion One shares on 19 December 2012, the merger implies an offer price of A0.0721 per Avocet share, representing a premium of 28.73% to the closing price of shares on 20 December 2012.

It also represents a premium of 28.07% to the 60day volumeweighted average price of Avocet shares for the period ending 20 December 2012.

On completion of the scheme of arrangement, Avocet shareholders and Lion One shareholders will hold around 18.5% and 81.5%, respectively, of the issued common shares of the merged entity.

Lion One shareholders will continue to hold their existing Lion One common shares.

Strong portfolio of assets

The merged entity will have a strong portfolio of precious and base metal and uranium projects in Australia, Fiji, and Argentina, including Lion One's advanced exploration gold project located on the Fijian Island of Viti Levu.

The Tuvatu Gold Project in Fiji hosts an Indicated Resource of 172,000 ounces of gold at an average grade of 7.05 grams per tonne (g/t) and an Inferred Resource of 480,000 ounces of gold at an average grade of 5.71g/t.

Recently completed and ongoing surface, underground and diamond drill programs have been focused on the expansion of this resource.

The incorporation of these results into the existing data base has the potential to significantly expand the current resource.

A Feasibility Study commissioned by previous owner Emperor Mines in 2000 reported that the Tuvatu Project hosted a probable Reserve of 269,000 ounces of gold at an average grade of 6.63g/t at a breakeven gold price of around US325.

The newly created company will also hold a 25% interest in the Olary Creek Iron Ore Project in South Australia, which has ready access to roads, rail and port facilities.

Avocet's interest is free carried by its joint venture partner to the completion of a Bankable Feasibility Study and a decision to mine being made.

Over 16,000 metres of drilling, from 55 diamond and reverse circulation holes, has highlighted the high grade and low impurities nature of the iron concentrate.

Additionally, the merged company will be able to earn up to a 51% interest in the Monster precious metal project which forms part of the Ashburton Property.

The Monster project hosts mineralised structures that have been traced over a strike length of more than 13 kilometres, with grades ranging up to 13g/t gold and 1,660g/t silver in rock chips.


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