Ann: Commencing Preliminary Discussions, page-21

If there really is a merger between equals, then the old HMX shareholders and the old CNB shareholders should not have to suffer any disadvantages. This means that the value of your shares in the portfolio would have to remain the same in absolute terms after the transaction.

Actually, there would then have to be a new company - e.g. with a new name and the shareholders would then receive a corresponding number of the new shares. The value of these shares (e.g. 50k) would have to be the same after the merger under equals as before the transaction.

The crux of the matter is that you first have to determine the value of the two companies. And both must agree that this value is also fair. In other words, the current market cap does not necessarily have to correspond to the value of HMX or CNB.

In fact, both HMX and CNB could be undervalued or overvalued. This, of course, has a major impact on the starting point for negotiations or the conclusion of such a transaction. There is therefore no guarantee that a deal will actually be concluded.

This in turn means that there is a risk that the existing shareholders of HMX, for example, will walk away as "losers" (or as winners). This is the case if the HMX package is priced too low or too high.

If we were to take the market cap as the starting point, the calculation would be simpler. But THAT is unlikely to be the case.

So the question is how CNB, for example, calculates the benefits of getting free access to Mt. Hope plus the exploration potential around the current boundaries. This may also be the case for other tenements.

Then HMX can ask itself how Kalman should be valued - because in HMX's current market cap, Kalman is non-existent in my view.

None of this makes it easy.

In the end, of course, a merger that frees up synergies usually adds up to more than 1+1 = 2.

HMX and CNB currently have a combined market cap of around A$ 140m. If we assume that a combined company could go "into production", then the market cap could multiply.So the question is whether a merger will actually unlock this synergy.

From HMX's point of view, one could also ask oneself whether one could simply sell a few areas around Mt. Hope to raise cash - for further drilling campaigns and remain "independent". From CNB's point of view, you could ask yourself whether you can get these tenements more cheaply if you complete a merger.

My enthusiasm is currently limited. I have seen and experienced too often that existing shareholders of one of the two companies have walked away as losers. It remains to be seen how the market, the media and the representatives of HMX and CNB react to all this.

It remains to be seen whether the 2 managements will treat us fairly this time.

Then I agree with Eastwest. A merger would make a lot of sense. The only question is what access to Mt. Hope is worth to CNB.

And it remains a fact that the SP of HMX was pushed down in order to worsen the initial situation of such a merger for HMX shareholders. Either way - nobody can avoid the over 50% long term holders of HMX. Therefore, I am skeptical that this baby will fly without the HMX shareholders interests being "considered" accordingly.

DYOR