article in australian

Courtesy of Vegemite on SS.

A whiff of discontent over Tamaya merger
Kevin Andrusiak
May 14, 2007 (The Australian)

THERE'S a big stink developing over Tamaya's off-market merger bid with Armenian gold producer Iberian Resources.
It's all brewing in the online stock market forums, some of which are not for the faint-hearted and have the propensity to get nasty and vindictive at time.

Some investors of both Tamaya and Iberian began squealing as soon as the Tamaya board lodged its four-for-one scrip merger offer for Iberian, claiming there was not enough on the table.

Observers said that in a situation like this, it usually meant the board had got the price right.

Still, some Iberian holders are furious that their board was so quick to recommend the Tamaya offer. The board accepted the bid about the same time it lodged, claiming it offered a 57.1 per cent three month VWAP premium to the share price.

“The merger of Tamaya and Iberian will produce a well balanced mining business with a market capitalisation in excess of $200 million, strong cash flow from its copper gold producing interests in Chile, as well as an outstanding project pipeline of near term gold producing assets,” is how Iberian managing director Matthew Wood put it at the time.

That was back in late February.

Since then, Tamaya has extended the bid which went unconditional last week.

Tamaya had a relevant interest of 65.64 per cent of Iberian stock according to its latest ASX notice, but obviously it still has a way to go to get to the 90 per cent compulsory acquisition threshold.

A merged entity would produced 43,000 ounces of gold and 8300 tonnes of copper annually and would be further down the path than most to hit stockbroker radars.

However, it looks like some Iberian investors are holding out for an increased offer from the Hugh Callaghan-led Tamaya.

They argue that Iberian's Lichkvaz gold mine in southern Armenia is worth much more than what Tamaya has put on the table.

Iberian had been talking about a possible 150,000 ounce a year mine, but no construction or production forecast has been forthcoming.

In fact, industry experts reckon it could be at least two or three years for the first gold pour and force Iberian to raise $100 million in capital along the way.

But is Tamaya about to up its offer to weed out the few remaining holders?

Not likely, given Callaghan's track record.

In fact, Daily Assay would say that is one of the safest bets going around that the chances of another offer is next to zero.

Callaghan has already gone unconditional and would be content to sit as a majority shareholder.

That leaves the real prospect that the remaining shares Iberian shares get shelved in a very illiquid market.

Geologic Resources, which held a deal-breaking 10.083 per cent stake have accepted the bid, leaving Robert Healy, an astute resources stock picker from Orange, as the biggest current holder outside of Tamaya with a stake of around 9.1 per cent.

It's possible he could strike a deal with other Iberian minorities to scupper the chances of Tamaya to get to the 90 per cent.

“I'm very happy and comfortable with the way the merger is going,” Callaghan said today.

He declined to comment about the minorities holding out, or the comments being bandied about in the online forums.

But he is adamant Tamaya has the cash flows from its Chilean operations to fund a start up at Lichkvaz.

It all makes for some exciting times over the next two weeks until the merger deal closes on May 31.