Metallica Minerals (ASX:MLM) says it stands by its recommendation that shareholders reject a takeover bid put forward by Diatreme Resources (ASX:DRX), which claims to have identified several “inaccuracies” in Metallica’s recent target statement.
On 10 May, Metallica issued a response to Diatreme’s third supplementary bidder’s statement, which criticised an independent expert report that accompanies Metallica’s target statement.
In response to Diatreme acknowledging Metallica’s previous challenges regarding securing project approvals, Metallica has indicated that it is more advanced than Diatreme and considers it “highly unlikely” that Diatreme would progress to a final investment decision (FID) by mid-2025.
Metallica, which has a market capitalisation of $22 million, believes the earliest Diatreme could complete an environmental impact statement would be in 2026.
As a result, Metallica says Diatreme’s proposed first shipment by late 2026 is not achievable unless the board and funders are willing to proceed past FID without many customary approvals and appropriate levels of engineering in place.
The company says it is more advanced than Diatreme because it has completed two further studies beyond Diatreme’s Scoping Study — providing the company with a higher level of certainty with each study.
As part of completing two studies, the company notes Diatreme is between 18 and 24 months behind Metallica on engineering and feasibility alone.
Meanwhile, Metallica says that there are no tugs at Cape Flattery Port, which impacts Diatreme’s proposed phase-two extensions and makes its port infrastructure interaction issues regarding tugs inaccurate.
Another “inaccuracy” flagged by Metallica includes Diatreme stating that silica sand producer Cape Flattery Silica Mines (CFSM) is required to adhere to the Port of Cape Flattery port rules, which includes the movements of ships.
Yet, Metallica says CFSM cannot be compelled to cooperate on vessel scheduling.
Metallica also wanted to clarify Diatreme’s claim of inaccurate freight rate differential calculations, saying Metallica’s calculations were conservative by assuming only 50% of tonnage was shipped in cape size vessels, and that the full value of the upside was not reported.
The company says its board intends to restate the relevant parts of the target’s statement to ensure that any revised disclosure is clear, concise, and effective for shareholders.
In mid-February 2024, Diatreme launched a conditional all-scrip takeover bid for Metallica, gaining support for the move from significant shareholder and global materials solutions company Sibelco Asia Pacific.
If the takeover goes ahead, it will create a silica sand company with a pro-forma market capitalisation of about $110 million and a substantial resource base.
Diatreme Resources is a critical minerals company focused on advancing its Northern Silica Project in Far North Queensland.
Write to Aaliyah Rogan at Mining.com.au
Images: Metallica Minerals
