Wayne Swan’s ASX sand crusade starts to crystallise

Mining circles have been flared recently with BHP’s audacious bid for Anglo American.The $60 billion bid lobbed last week was promptly rejected, though no one doubts Mike Henry’s big copper dreaming, banking on the metal being key to all manner of energy transition projects.

Slightly less remarked upon has been the aggressive moves by Wayne Swan’s ASX-listed Diatreme Resources, which is trying to take part in the consolidation of the big sand market – another crucial resource for a low-carbon future.As we’ve reported previously, the Swan-chaired Diatreme made a fairly schoolboy M&A error in efforts to take over Queensland rival Metallica after breezing past a standstill agreement the two minnows had in place.That’s done little to stop Swanny and Diatreme pushing ahead with plans to combine future extraction at one of Australia’s largest world-class silica mines, at Cape Flattery in northern Queensland.

Last week, Metallica – “Enter the Sandman” perhaps? – returned to shareholders, urging them to reject the offer, armed with an assessment from Advisory Partners Connect.Diatreme’s all-scrip offer valued Metallica at $24 million. Yet, here was a report claiming Metallica’s fair value was between $165 million (at the low end) and $200 million.The world of independent valuation reports is wild and whacky, but rarely do you get valuation disparities out by a factor of 10. Welcome to the wonderfully unpredictable sand exploration market!Metallica also laid out how Diatreme’s minority shareholders were getting stiffed in the merger through the proposed share dilution.It also hoisted red flags about the major shareholders of both firms; Rich Lister and coal baron Brian Flannery and Belgian miner Sibelco.Metallica’s argument is that they would obviously vote in their own self-interests, not for the poor under-loved holders of the 2¢ stock.All this manoeuvring comes as federal colleagues of Swan – the Labor Party’s national president – try to jump-start the local solar panel manufacturing industry.Anthony Albanese earmarked $1 billion of taxpayer money to be pumped into the sector that makes PV material, which will need silica in the construction process.Swan got very excited shilling the new protectionist regime on Today last week, and miffed at basic criticisms about its economic rationale.The hosts obviously knew they were talking to big ALP. But do you think they considered that he now works for big sand as well?

Wayne Swan sinking in ASX sand

Former world’s best treasurer Wayne Swan has been building a tidy post-political life. There’s the chairmanship of Cbus, the industry super giant, the commercial property and union donor powerhouse.He’s on the board of Industry Super Australia, alongside union mates such as Sally McManus and Michael O’Connor, plus membership of the new umbrella organisation, Super Members Council, chaired by his mate Nicola Roxon. He’s also currently national president of the ALP.Former world’s best treasurer Wayne Swan. Michele MossopBut under the radar, Nambour’s No. 2 boy has also been serving as the chairman of Diatreme Resources, a Queensland-based ASX-listed silica mining firm.What does Swanny know about small-cap mining companies, or … sand? Assume for a moment that the $80 million market cap firm puts a high value on the man’s many talents, operating as it does under the purview of a Queensland Labor government. There’s also governance to think about.Diatreme’s fortunes are pinned on massive sand pits situated at Cape Flattery, near Cape York. Last year, Diatreme sought merger discussions with fellow minnow Metallica Minerals, the owner of an adjacent sand mine. The companies entered into an agreement, allowing both to kick the tyres.Months went by and Metallica heard nothing. Then two weeks ago, Diatreme pounced, announcing to the ASX an intention to take over the whole of Metallica with an all-scrip offer. The proposal came with a 38 per cent premium for Metallica investors, whose shares have traded around 2¢ in February.Last week, Diatreme came back to the market with an embarrassing update. Diatreme CEO Neil McIntyre said Metallica had replied, alleging the company had breached a confidentiality agreement the two firms signed in October last year. That agreement contained a standstill provision, that neither would try to buy shares of the other without written consent. Whoops!On Tuesday this week, Diatreme said the company would now seek a waiver from Metallica over the standstill agreement. Or take the issue up with the Takeovers Panel.The farrago has understandably unimpressed Metallica – it’s understood the firm believes the offer undervalues the small-cap firm, opening the door to options with other larger companies. In response to this see-sawing, Metallica’s stock has shot up 40 per cent over February, naturally, making that Diatreme offer look stale.Breezing over a confidential standstill agreement seems like a classroom M&A snafu that could be avoided with a strong board, containing sharp corporate minds. The type of thing that’d be caught by a detail-oriented chairman.Never mind. As well as the super and sand groping, Swanny remains available on the speaker-for-hire circuit. Speaker wranglers Saxton pitch the former treasurer’s impressive credentials, suggesting “talking points” for the former treasurer. Among them “corporate governance”. At least Swanny will have something to talk about.