Got it.
Planned merger between Brisbane-based miner and foreign suitor collapses
JANUARY 09, 2019A PLANNED $45 million merger between Brisbane-based Metallica Minerals and Melior Resources has collapsed, with each side blaming the other for the deal’s demise.
Andrew Gillies.
The agreement, which was supposed to be ratified by investors this week but fell apart just before the new year, has prompted Metallica to flag possible legal action.
The company said it is “continuing to evaluate potential recourse for damages caused by Melior’s breaches under the arrangement agreement’’.
Metallica, a junior miner which aims to develop a bauxite project near Weipa, alleges Melior made “breaches of representations, warranties and covenants’’.
Metallica chief executive Simon Slesarewich declined to elaborate yesterday, citing commercial in confidence reasons.
Similarly, Melior accused Metallica of “failure to perform certain covenants and obligations as required’’ ahead of the December 31 completion deadline.
Although listed in Canada, Melior has a Brisbane office and plans to mine ilmenite at Goondicum, west of Bundaberg.
The ill-fated union, which was announced in September, was later recommended to Metallica investors in an independent expert's report as a “reasonable’’ transaction with many potential benefits.
The report found the deal would have given the merged group greater scale and access to funding while saving cash.
“We’re very disappointed the Melior transaction didn’t occur because it was going to add value for all shareholders,’’ Mr Slesarewich said.
But rebel shareholders in Metallica maintain it was a bad deal and, after a false start in October, have secured a special meeting February 1 to spill the board.
They want to turf out Mr Slesarewich, chairman Peter Turnbull and non-executive director Ian Jacobson and replace them with three new mining figures, including Metallica founder Andrew Gillies, who stepped down in 2015.
The critics allege that Melior’s Goondicum project had high risks and previously failed. They are also unhappy with delays in Metallica's bauxite project at Urquhart and the sale of a cobalt/nickel project.
In addition, rebels have harshly criticised executive compensation, including Mr Slesarewich's $614,565 package. More than half of all Metallica investors rejected the remuneration report at November’s AGM.
Mr Slesarewich accuses rebels of wanting to take control of the company without paying a premium, an allegation they reject.
