Metallica Minerals (MM), the Queensland focused mining company, hopes to combine its operations and assets with Queensland Ores (QO), a fellow mining company, by making an off-market takeover offer for all of the shares in QO. The merged group would have a diversified portfolio of Queensland mineral assets – including major interests in nickel, cobalt, coal, bauxite, limestone, mineral sands, tungsten, molybdenum, copper and gold. This includes MM’s NORNICO nickel/cobalt project, major investments in coal – through the 84% owned Metrocoal subsidiary – and in bauxite – through the 32% owned Cape Alumina, the possibility of a re-commissioned Wolfram Camp molybdenum/tungsten mine and the Mount Cannindah copper/gold exploration project. 

MM believes that this merger would enhance value for both companies and provide a platform for growth when the market improves. The balance sheet of the merged company would be strong – MM has substantial cash reserves (with no debt) of some A$20 million.  This will assist QO to continue as a going concern and give the merged group the ability to progress its interests. MM intends to systematically complete its evaluation of the QO assets without expending significant amounts of its cash reserves. If the merger was completed, QO shareholders would hold around 8% of the merged group.

The offer is subject to a number of conditions, including a 90% minimum acceptance condition. MM currently has no relevant interest in any ordinary shares in QO. MM is preparing a bidder’s statement which will be lodged with the Australian Securities & Investments Commission and be sent to QO shareholders on about 9 April 2009. The offer period is expected to commence on 9 April 2009 and close, unless extended, on 11 May 2009.