WESTERN Australian resource companies Monarch Gold Mining and Tanami Gold appear to have developed a case of cold feet, today calling an end to discussions about a potential merger that began just over a month ago.
Denis Waddell
Michael Kiernan
What was described as "a match made in heaven" by Monarch executive chairman Michael Kiernan at the time the merger talks were made public is now an unlikely prospect ? at least in the near future ? after the two parties agreed late Friday that their respective interests were best served by focusing on developing their own projects.
Speaking with MiningNews.net this morning, both Kiernan and Tanami executive chairman Denis Waddell stressed the decision was mutual.
"We went through the exercise and we both think it's appropriate at this time for both parties to focus on developing and getting their own projects up," said Kiernan, who is guiding Monarch's Davyhurst project in WA towards starting production some time next year.
"We're a long way down the road with Davyhurst. To be quite frank, I wanted to get that up and running first before we started talking about mergers."
"There was a lot of goodwill. On balance, we just looked at the requirements across the board and we feel at this stage, we're better off pursuing our own projects," Waddell said.
"Once we made a decision, we thought well there's no point continuing. It was pretty clear as far as we were concerned that it was the best thing to do."
The operational expertise of the Monarch board was expected to have been a welcome addition to Tanami, which has endured a bumpy start to production at its flagship Coyote mine.
After repeatedly returning to the market for capital this year due to construction delays and cost overruns, Tanami was at one stage forced to suspend mining operations as a result of hold-ups in commissioning the project's plant.
The company appears to be getting back on track, however. Last month it achieved the highest weekly mill throughput and mill availability at Coyote to date, and gold recovery from the plant is also improving.
Monarch, meanwhile, had made clear its intention of growing into 500,000oz per annum gold producer by 2009 and the merger with Tanami was to have taken it a significant way towards this goal.
Neither Kiernan nor Waddell ruled out revisiting the proposed merger at some stage in the future, with the former saying Tanami would remain on Monarch's radar along with two or three other companies as the company sought to reach the 500,000ozpa mark.
In other news, Tanami today announced the results of follow-up at its remote Lake Mackay project in the Northern Territory where significant gold mineralisation was first identified in September.
According to the company, the follow-up drilling has turned up significant copper mineralisation, including an intercept of 4m grading 2.7% copper from 49m including 1m at 5.1% copper.
It also returned further encouraging gold intercepts to back up the first pass intercept of 16m grading 3.4 grams of gold per tonne from 29m that marked the Tekapo discovery at Lake Mackay. Best among the latest results was an intercept of 4m at 3.3gpt from 12m.
Tanami said the results represented a significant copper-gold discovery given the remote location of the project in an area of central Australia, which has not previously been subject to modern-day mineral exploration.
Shares in Tanami were up 0.5c (3.5%) at 15c in early afternoon trading, while shares in Monarch were unchanged at 24c.
TAM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
