Wayne Swan-backed silica miner bids for rival Metallica
Queensland silica sand miner Diatreme Resources, chaired by former treasurer Wayne Swan, has made a conditional bid for rival Metallica Minerals.
Brisbane-based silica miner Diatreme Resources, chaired by former treasurer Wayne Swan, has made a takeover bid for rival Metallica Minerals, a move that would create one of the world’s largest sand mines.
The all-scrip offer, valued at close to $30m, comes amid growing demand for silica for solar panels, computers and phone screens. Belgium industrial minerals group Sibelco, which holds shares in both companies, says it intended to accept the offer on a conditional basis.
Metallica shareholders will receive 1.3319 fully paid ordinary shares in Diatreme under the offer, a 37 per cent premium to its 30 day trading average.
Mr Swan said Diatreme intended to put the offer directly to Metallica shareholders on the basis that it represents a “compelling opportunity for the shareholders of both companies,” Diatreme aims to start exporting silica sand from the area within two years.
“We are grateful for the early support shown for this Offer by Sibelco Asia Pacific, a major shareholder of both Metallica and Diatreme,” said Mr Swan. Both Diatreme and Metallica hold large reserves of silica sands in the Cape Flattery region, one of the richest reserves of the material in the world. The world’s largest silica mine run by Japan’s Mitsubishi has been operating in the region since the 1960s.
The global silica sand market is expected to grow from US$8 billion in 2019 to US $20 billion this year amid demand for high-quality glass needed in solar panels, computer screens, televisions and electric vehicles.
The Queensland government last year identified Cape Flattery as a critical minerals mining area and export hub of significance.
Diatreme chief executive Neil McIntyre said the takeover bid aligned with Diatreme’s strategy of building a “world class asset portfolio of high purity silica deposits”
“We are better together than apart both in terms of a voice to government also stakeholders including traditional owners,” said Mr McIntyre. “It also has the potential to speed up the approval processes as it streamlines things.”
“Diatreme has the financial capacity, technical expertise, industry partners and third-party stakeholder relationships required to advance the silica assets of the combined entity.”
Metallica chief executive Theo Psaros, a former boss of Queensland Rugby Union, last year likened the region to the Bowen Basin of silica sand.
The Bowen Basin contains the largest coal reserve in Australia, extends over approximately 60,000 square kilometres of Central Queensland and is a major contributor to the economy.
“The resource is very large with proximity to good infrastructure,” said Mr Psaros. “The deposits in there are well known around the world for being one of the most pure silica sand products available.” Shares in Metallica, which has yet to respond to the bid, climbed 4.17 per cent to 2.5 cents
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