Metallica Minerals rejects offer by Diatreme Resources
A conditional takeover of Cape York sand leases by emerging silica miner Diatreme Resources has been knocked back by Metallica Minerals. Why shareholders vetoed the offer.
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A conditional takeover of Cape York sand leases by emerging silica miner Diatreme Resources has been knocked back by Metallica Minerals.
Under the bid made in February, Brisbane-based Diatreme Resources would secure control of
Metallica Minerals’ silica sand assets at Cape Flattery to create a super high quality sand resource for use in the manufacture of solar photovoltaic panels.
However Metallica directors recommended shareholders reject the offer based on a report by an independent expert which stated the deal was not “fair or reasonable”.
According to the expert, Metallica would be worth 53.7 per cent of the merged company if the takeover went ahead, yet Diatreme shares that Metallica shareholders would receive only would give them 25.5 per cent of the merged company.
The report also stated the Northern Silica Project carried a higher risk due to environmental challenges posed by wetlands of high ecological significance within the sand extraction footprint.
A report prepared by Cowie Environmental Services for Metallica stated additional environmental approvals could be required for the Northern Silica Project which have yet to be identified.
“Any additional environmental approvals may result in future restrictions or amendments to the design/layout and scale required,” managing director Brendan Cowie stated.
Approval to use third party sand loading infrastructure owned by established miner Mitsubishi Corporation which is yet to be signed off on could result in a “redesign and rethink” of Diatreme’s approach, according to Cowie Environmental Services.
A claim of an undefined ore reserve at the Northern Silica Project compared to a reserve at Metallica’s Cape Flattery project of 47m tonnes expected to produce 3m tonnes each year, was also presented to shareholders.
The independent expert said Diatreme had underestimated the capital investment to build their export infrastructure by $220m.
It was previously claimed by Diatreme that major shareholders of Metallica and Diatreme, Sibelco Asia Pacific demonstrated early support for the deal.
In August last year Diatreme Resources withdrew the Environmental Impact Statement process attached to the Galalar Silica sand project at Cape Bedford to focus on the Northern Silica Project, which has been granted Regional Significance status by the Department of Regional Development, Manufacturing and Water.
Originally published as Metallica Minerals rejects offer by Diatreme Resources
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