Investors rebel over Wayne Swan-chaired Diatreme’s Metallica tilt
Wayne Swan-chaired Diatreme is facing a shareholder revolt at silica sand target Metallica Minerals who believe they are getting short-changed in a planned hostile takeover.
Minority Metallica shareholders recently formed the Small Shareholders’ Action Group (SSAG) and increased their combined stake to more than 7 per cent in a bid to stymie the deal.
“This is simply from word-of-mouth, with communications to all 1300-plus small shareholders only being received in their letterboxes from today,” said SSAG in a statement on Tuesday.
“We expect support to increase rapidly throughout this week.”
Diatreme needs 90 per cent of Metallica to trigger a compulsory acquisition, so if SSAG builds a blocking 10 per cent stake the target would remain listed.
Diatreme has amassed a 57 per cent stake in Metallica since the hostile takeover bid was launched in February.
Metallica produced an independent expert report last month declaring the offer of 1.3319 Diatreme shares for every Metallica share was “not fair and not reasonable” and substantially undervalued the target.
Minority shareholders of Metallica, including SSAG, fear they will be disadvantaged if the deal proceeds given that its biggest shareholders – Belgian resources firm Sibelco, rich-lister Brian Flannery and German fund Deutsche Balaton – control 51 per cent of the company and are the biggest shareholders in Diatreme.
Metallica has come out swinging against the offer, telling disallowed last month that the takeover could be a move to remove a competitor rather than a legitimate proposal to advance its silica sands project. SSAG has hired law firm Talbot Sayer to represent the group in proceedings underway at the Takeover Panel.
Those proceedings were commenced by Diatreme as it sought to nullify a standstill agreement made in 2023 that it not launch a takeover bid for Metallica.
That undertaking was linked to an early attempt by Diatreme to kick the tyres on Metallica, which owns an adjacent silica sands project at Cape Flattery in North Queensland.
SSAG said its concerns included an alleged breach of trust by Diatreme of the standstill agreement, the large disparity in the expert valuation between Diatreme and Metallica and concerns silica sand will be exported through an overseas subsidiary company and deny shareholders a return on their investment in the company.
The deal would create one of the world’s largest silica mines amid surging demand for the raw material used in solar panels, computers and phone screens.
The offer has underwhelmed Metallica, which claims its has put a lot of expensive ground work into progressing its project, including environmental and feasibility studies as well as having the best option for a jetty to export the resource.
Diatreme chief executive Neil McIntyre said the company respected the views of all Metallica shareholders, whether large or small.
“It is not unusual for shareholders to have queries at this point in a takeover process,” he said. “Diatreme considers its offer represents a compelling opportunity for the shareholders of both Metallica and Diatreme.
“Importantly, Diatreme has the financial capacity, technical expertise, industry partners and third-party stakeholder relationships required to advance the silica assets of the combined entity in the interest of all combined shareholders.”
Mr McIntyre said Diatreme was seeking orders from the Takeovers Panel that Metallica disclose further information about the status of talks regarding competing proposals and waive the standstill restriction preventing the offer being completed.
Ann: METALLICA RECOMMENDS TAKE NO ACTION, page-7
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Metallica Minerals has released a definitive feasibility study confirming potential for a long life, low-operating-cost silica sand project at Cape Flattery.
The Cape Flattery silica sand project, owned by Metallica Minerals.
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