A proposed takeover bid by Cauldron Energy for Energia Minerals could be over before it began, with Energia’s major shareholder Uranium Equities stating that Cauldron’s offer substantially undervalued the company. In a bold, unprecedented move, Cauldron Energy announced its intention to undertake an off-market takeover bid for Energia Minerals. Shortly after the announcement was made, Energia’s directors published a letter to shareholders urging them not to take any brash action in response to the announcement.
Cauldron’s highly conditional offer for all ordinary Energia shares was made public on 18 March. Were the deal to proceed, it would see the potential new entity gain a substantial foothold in Australia’s expanding uranium industry. In its announcement, Cauldron Energy outlined the ground the two companies stood to gain in the merger, highlighting their potential control more than 190km of contiguous mineralisation in the Carnarvon Basin region of WA: an area where recent exploration success has defined a metal endowment of “potential global significance”.
In combining assets, the new company would hold significant resources within WA’s emerging uranium province, with potential for an in-situ leach operation and heightened up-side potential with multiple prospects and targets. Cauldron’s proposal maintained substantial clauses, however: most notably, the offer stated that Energia shareholders would be offered just one Cauldron share for every eight Energia shares held. The offer also stipulated a minimum acceptance condition wherein, at the end of the offer period, the number of Energia shares in which Cauldron had a relevant interest must comprise 90 per cent or greater of all Energia shares on issue.
Energia’s directors’ distribution advising shareholders to take no market action stated that there had been no prior merger discussions or negotiations between Cauldron and Energia.
“Shareholders [will be kept] fully informed of further developments as they occur … [We] will provide a formal recommendation on the bid in ample time for shareholders to make an informed decision,” Energia’s document advised. However, Cauldron Energy executive chairman Tony Sage remained positive that the merger would act in the long-term interest of both companies.
“Our bid for Energia rests on our confidence that we are on the verge of defining a major new uranium province in the Carnarvon Basin, and that both Cauldron and Energia have huge exploration and corporate synergies,” he said.
“By combining these companies, we can create a uranium-focused entity that holds a dominant land position in an emerging and potentially significant uranium province.
“The new company will have the financial, material and human resources to advance multiple uranium deposits towards development, in an environment suitable for low-cost and environmentally friendly in-situ leach mining methods.”