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- AuStar Gold (AUL) says it will not proceed with its proposed acquisition of Centennial Mining
- It has also withdrawn all offers which sought to raise $2.4 million in funding to meet the deed of company arrangement
- The gold company intends to issue a new prospectus to raise capital and focus on its current tenement portfolio
- AuStar Gold has been in a trading halt since January 16 and shares last traded for 24.5 cents each
AuStar Gold (AUL) says it will not proceed with its proposed acquisition of Centennial Mining.
Over the last six months, AuStar has been in intensive negotiations with numerous stakeholders, however, the Board couldn’t satisfy its own due diligence requirements.
“The interest of shareholders must come first and despite the considerable investment in this process, the Board could not satisfy itself of various transactional and completion risks,” Chairman Frank Terranova said.
AuStar will continue to pursue its strategy to cement itself as an emerging gold company and will focus on its current assets and potential opportunities.
The company first announced its intention to purchase Centennial Mining in September 2019.
This was to be done through an implementation of the deed of company arrangement (DOCA) between joint administrators of Centennial and Maldon Resources and Avior Consulting for a $2.4 million cash contribution.
In December, a placement, entitlement and subscription offer was announced to meet the DOCA contribution. Unfortunately, the company noticed numerous third party attempts to disrupt the process by submitting a competing DOCA.
Just recently, AuStar realised its major secured creditor, Mining Lending, was seeking interest from unrelated third parties to purchase its debt and securities over Centennial and Maldon.
The gold company believed it was unlikely its existing DOCA would meet the criteria, so it entered an agreement to acquire the debt owed by Centennial and Maldon.
Additional information was found which led to the discovery of potential legal risks which couldn’t be resolved to the satisfaction of key stakeholders.
The company has now withdrawn all offers under the prospectus and a supplementary prospectus will be lodged with the ASIC later today to affect such withdrawal.
Furthermore, AuStar plans to raise capital for its existing tenement portfolio.
AuStar Gold has been in a trading halt since January 16 and shares last traded for 24.5 cents each.
