Sibelco central character in Diatreme’s tilt for Metallica

Diatreme Resources (ASX:DRX) has made a conditional intention to make an all-scrip takeover bid for emerging silica sand mining company Metallica Minerals (ASX:MLM). 

Metallica’s share price rose 8.33% as of 2.40pm AEST today (16 February 2024) giving it a market capitalisation of $19.19 million.

Global material solutions company Sibelco Asia Pacific is a significant shareholder in both suitor and target – 16.41% in Metallica and 18.64% in Diatreme, according to the latest ASX filings.

Diatreme, which has a $85.78 million market capitalisation, is being advised by GRE Capital, KPMG Corporate Finance, and by McCullough Robertson as legal counsel.

If successful, the offer would create an ASX-listed silica company with a pro-forma market capitalisation of about $110 million and a ‘significant’ mineral resource base. 

Sibelco has actively been increasing its shareholding in Metallica in a series of trades over recent months, from 12.6% in December 2022 to its latest increase on 17 August 2023 to reach 16.41%.

Diatreme today reports Sibelco supports the takeover offer, which includes a 50.1% minimum acceptance condition. 

Other significant shareholders in Metallica include HSBC Custody Nominees with a 24.89% stake and Sparta with 9.59%.  

Metallica was unavailable for comment while Sibelco did not respond to requests seeking comment prior to going to press.

In an ASX release today (16 February), Diatreme Resources Chairman and former Deputy Prime Minister of Australia Wayne Swan says the proposed transaction is a ‘logical’ step in ensuring shareholders of both parties see the benefits of a focussed silica development company. 

Diatreme intends to put this offer directly to Metallica shareholders on the basis that it represents a compelling opportunity for the shareholders of both Metallica and Diatreme. We are grateful for the early support shown by this offer by Sibelco Asia Pacific, a major shareholder of both Metallica and Diatreme. 

Diatreme intends to put this offer directly to Metallica shareholders on the basis that it represents a compelling opportunity for the shareholders of both Metallica and Diatreme

This is expected to see us create value for the shareholders of both companies, as well as external stakeholders such as traditional owners, local business, and the broader Cooktown and Hopevale communities. 

The Queensland government has identified Cape Flattery as a critical minerals mining area and export hub of significance. A combined Diatreme and Metallica is expected to see them contribute significantly to these initiatives.”

Under the takeover offer, Metallica shareholders will receive 1.3319 fully paid ordinary shares in Diatreme for every 1 ordinary share in Metallica held on the record date.  

Based on Diatreme’s last closing price of $0.022 on 15 February 2024, the company says the offer is an ‘attractive’ premium of 22.08% to Metallica’s last closing of $0.024 on the same date, as well as an implied value of $0.0309 per Metallica share taking into consideration Diatreme’s 30-day volume weighted average price (VWAP) of $0.0232. 

The price is also an ‘attractive’ premia of 37.33% to Metallica’s VWAP of $0.0225 and 28.75% to its last closing price of $0.024. 

Diatreme expects to provide its bidder’s statement to the Australian Securities & Investment Commission (ASIC), Metallica, and the Australian Securities Exchange (ASX) before the end of March 2024. 

According to Diatreme the combination could also lead to potential savings and synergies via more ‘efficient’ and less costly permitting, development, offtake and project financing processes, and improved bargaining power in relation to shipping and transportation costs, equipment, infrastructure. 

Both Diatreme’s Northern Silica Project and Metallica’s Cape Flattery Silica Project have been designated as a ‘Co-ordinated Project’ under Queensland’s State Development and Public Works Organisation Act.  

As of 31 December 2023, Diatreme has $10.8 million cash at hand and $26.7 million in the Cape Flattery Silica Joint Venture (JV). 

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. 

Sibelco Asia Pacific is a material solutions company which mines, processes, and sells individual minerals at locations worldwide, focused primarily on silica, clays, feldspathoids, and olivine. 

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

Write to Adam Drought at Mining.com.au

Images: Metallica
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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.