CONSOLIDATED Minerals Limited has finally done what the market expected taking a cornerstone investment in competitor Sylvania Resources Limited.
CONSOLIDATED Minerals Limited has finally done what the market expected taking a cornerstone investment in competitor Sylvania Resources Limited.
Consolidated Minerals last week increased its interest in Sylvania from 1.9 million ordinary shares, representing 6.5 per cent of the company, to 6.3 million shares, bringing its stake to nearly 20 per cent.
The jump on Sylvania comes almost a month after Mineral Securities Limited executive chairman Keith Liddell pulled the plug on a deal with Sylvania under which the chromite explorer would have taken an interest in Mineral Securities’ 50 per cent controlled Australian Ferroalloy Pty Ltd.
The deal with Australian Ferroalloy was to propel Sylvania into a ferro-alloy producer based on a feasibility study completed by Australian Ferroalloy directors Tim Adams and Michael Walters.
The deal was off less than 24 hours after meeting with Sylvania share-holders, who endorsed the deal, which came with a shakeout of the company’s directors.
The increased shareholding by Consolidated defies earlier comments made in May to WA Business News by managing director Michael Kiernan in response to speculation that the company was interested in taking over Sylvania. Mr Kiernan then said that he was not interested in either increasing or selling its “strategic stake” of 6.5 per cent in Sylvania.
He also said that Consolidated had no interest in the tenements Sylvania owned that straddle Consolidated’s Coobina Chromite operation, 60 kilometres east of Newman, in the Pilbara.
Mr Kiernan was not available to comment on last week’s share purchase drive.
However, Sylvania executive chair-man Jack Griffin said that, following a meeting held with Mr Kiernan last Friday, Consolidated was unlikely to cement its position further in the company.
“We have a very productive meeting with [Mr] Kiernan and we intend now to do things together,” Mr Griffin said.
“I think they are just protecting their interests and helping us as big brother.”
Mr Griffin said while discussion had not progressed into how both companies could work together in a practical sense on the ground, it was possible that both companies could benefit considerably in terms of exploration and logistical support.
“They are certainly the big guys in the area. We certainly would not have wanted to go into competition, we simply would not have been able to match them,” Mr Griffin said.
The interest from Consolidated pushed Sylvania’s shares up sharply this week. It climbed from an all time low of 11.5 cents to a new high of 15.5 cents, recovering the ground lost when the Australian Ferroalloy deal fell away.
