Diatreme determining defeating condition in disputed Metallica deed 

Diatreme Resources’ (ASX:DRX) proposed all-scrip takeover of silica sand company Metallica Minerals (ASX:MLM) has encountered a hurdle in the form of a confidentiality deed between both suitor and target signed on 30 October 2023.

In October, Diatreme and Metallica entered a confidentiality deed that contains a standstill undertaking restricting Diatreme’s ability to acquire ordinary shares in Metallica under the proposed takeover bid, without the target’s consent.

To address this, Diatreme will include as a defeating condition to the proposed takeover bid, a condition that it obtains either the written consent or waiver from Metallica to the acquisition of its shares under the proposed bid or the Takeovers Panel makes orders and declarations Diatreme is no longer restrained from acquiring Metallica’s shares under the offer by the terms of the confidentiality deed.

On 23 February 2024, Metallica announced if Diatreme was to go ahead with its intended all-scrip takeover without the consent of the company, the suitor would be in breach of a pre-existing agreement between both parties, as reported by Mining.com.au

As mentioned, the agreement in question is a confidentiality deed containing a standstill undertaking which restricts Diatreme’s ability to acquire ordinary shares in Metallica under the proposed takeover bid, without Metallica’s consent. 

As such to combat the deed, Diatreme announces today (27 February 2024) it will include as a defeating condition to the proposed takeover bid that Diatreme obtains either the written consent or waiver from Metallica to the acquisition of its shares.

Earlier this month (16 February 2024), Diatreme made the conditional intention to make a takeover bid for Metallica to create what would be an ASX-listed silica company with a pro-forma market capitalisation of about $110 million and a ‘significant’ mineral resource base, as reported by this news service. 

Metallica, in an announcement on 19 February, advised its shareholders to take no action regarding the takeover bid.    

Diatreme Resources is an explorer and miner which specialises in advanced mineral sands and silica sand projects. 

Metallica Minerals is focused on developing its Cape Flattery Project, adjacent to the Cape Flattery Silica Sand mining and shipping operation owned by Mitsubishi Corporation in North Queensland.

Write to Adam Drought at Mining.com.au

Images: Diatreme Resources
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.