THE cat is out of the bag as to what was happening behind the scenes when both Jervois Mining and Intec met last month to thrash out a possible tie-up. And it looks like the details amount to a right royal slap in the face for suitor Intec, dished out by a market minnow with big dreams.
Firstly, the basics behind how the two got to the merger zone in the first place.
Jervois is trying to prove up a whopper of a nickel laterite deposit near Young in NSW.
Nickel laterites have never been much fun developing, but with the nickel price going gangbusters and nickel sulphide deposits are rarity, laterites are becoming much more than just a passing fad.
Jervois wants to produce 60,000 tonnes of nickel a year (a big project in the nickel world) at Young along with 6000 tonnes of cobalt concentrate.
So big is the deposit that the Chinese are interested, but that doesn't seem to be a rarity any more in the resources game at the moment.
The Melbourne-based company has had a modicum of success with its own hydromet process to be installed at Young and testing could soon begin at CSIRO laboratories in Perth.
However, it is still years away from ever getting into production at Young, a fact represented by that its share price hasn't enjoyed much of run-up of late despite the booming nickel price.
That didn't stop Intec from coming sniffing around the $45 million company.
Intec, which has patented its own chloride hydromet technology, is picking through the tailings at its Hellyer Metals Project in Tasmania where it is enjoying the benefits of a higher zinc price.
Intec built a 14.5 per cent stake in Jervois earlier this year, buying stock for a touch over 1c before it called for a summit meeting with Jervois to discuss merger opportunities.
Intec put two deals on the table, both of which were knocked back.
No one, not even Intec or Jervois shareholders, was privy to the forensics behind the offers.
But Jervois shareholders have since rightly demanded they know exactly why their board sent Intec packing.
It looks like Intec saw its chloride hydromet technology as a sure winner for Jervois and the type of geology at Young.
Not so, Jervois retaliated during the negotiations, disputing Intec's assertion of January 23 that its technology would accelerate development of the Young resource.
Intec's 1500 tonne a year demonstration plant would be up to 33 times too small for what Jervois was proposing.
"INL claim that their demonstration plant at Burnie in tasmania would have been beneficial for testing the Young laterite," Jervois managing director Duncan Pursell said in a statement today.
"The demonstration plant has a capacity of only 1500 tonnes a year. To adequately test the nickel laterites at Young, a demonstration plant of 20,000 to 50,000 tonnes a year is required, rendering the INL test facility proposal unrealistic and inadequate."
Also of interest is that while Jervois is still years away from receiving cashflows from Young, it believed that Intec could not bring anything of value to the merger deal.
Intec must surely rate that as a slap in the face, given it is should be reaping the rewards offered up by the zinc tailings at Hellyer.
Its latest accounts reveal it made a loss of $5.3 million for the six months to the end of December, but that was before it started shipping zinc concentrate out of Burnie in January.
Intec should have banked a cheque of $US1.86 million late February for its first shipment of 5000 dry tonnes of zinc concentrate as part of an anticipated 63,000 tonne annual production rate.
But unfortunately for Intec, Jervois seems to have rated Hellyer as only something of value if it could also capture many of the other precious metals in the Hellyer tailings.
Intec's technology means it misses all the gold and silver at Hellyer.
"INL's merger proposal would only have been worthy of consideration if the precious metals were capable of being recovered," Pursell added.
"The Jervois board has also determined that the work being undertaken for the company by Canadian consultant Dr Bryn Harris on chloride extraction technology for nickel laterites is far more advanced that work being carried out by other companies, including INL."
So there you have it.
Intec were rebuffed by a minnow who rejected its technology and at the same time declared Intec would bring nothing of value to the company.
Intec's next move is anyone's guess. While it has sold down its Jervois stake to 8.33 per cent, it is not known whether it has given up for good the dream of getting a slice of the Young pie.
End.
Cheers, Pie
JRV Price at posting:
0.0¢ Sentiment: None Disclosure: Held
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