AuStar Gold has abandoned its intention to acquire Centennial Mining after six months of negotiations with stakeholders.
The company will no longer be going ahead with its plan to take over all assets and debt owed by Centennial Mining and Maldon Resources.
In September last year, AuStar announced it had reached an agreement to purchase Centennial via merger, but stated it could not satisfy its own due diligence requirements for the deal.
After discussions with financiers to ensure all funding requirements were met, there were significant potential legal risks that could not be resolved to the satisfaction of key stakeholders.
AuStar chairman Frank Terranova said while the outcome of the acquisition was disappointing, it was the right decision for shareholders.
“We continue to believe that regional consolidation makes good economic sense and aggressively pursuing this merger opportunity and all it involved was justified,” Terranova said.
“However, the interest of the shareholders must come first and despite the considerable investment in this process, the board could not satisfy itself of various transactional and completion risks.”
AuStar planned to raise funds to meet the deed of company arrangement (DOCA) contribution, but will now issue a new prospectus to raise capital for ongoing exploration and mine development at its existing tenements in Victoria.
This fits with AuStar’s strategic objective to grow into an emerging gold company, focussing on its existing assets, the Morning Star and Rose of Denmark mines, which are located 120 kilometres east of Melbourne.