Tanami shareholders back Northern Star

Shareholders in Tanami Gold have overwhelmingly supported a tie-up with Northern Star Resources, despite the threat of legal action from rival miner and would-be partner Metals X.

Tanami Gold struck a farm-in and joint venture agreement with Metals X in early February, to support development of its Central Tanami gold project.

Later that month, the company’s directors said they preferred an alternative proposal put forward by Northern Star.

At a Tanami Gold shareholders’ meeting today, 924.4 million shares were voted in favour of the Northern Star proposal and only 1.2 million against.

In contrast, the Metals X proposal attracted only 5.1 million shares in favour and had 905 million against, with the balance abstaining.

Shareholders were unmoved by legal threats from Metals X, which has told Tanami Gold it would claim damages that outweigh the benefits of the Northern Star deal.

Tanami chairman Gerard McMahon declined to comment on the legal dispute but the company’s lawyer, Hardy Bowen partner Michael Bowen, told the meeting there was “no merit” in the Metals X case.

Northern Star plans to pay $20 million for a 25 per cent stake in the project, and will earn a further 35 per cent by sole funding all expenses to bring the project into commercial production.

It will also be granted options to move to 100 per cent ownership of the project.

Mr McMahon said production from the Central Tanami mine was some years down the track.

Tanami Gold director Brett Montgomery told the meeting the company would need to issue a large number of shares and raise debt finance if it wanted to develop the project itself.

“Because of the state of the company, I don’t think we’re in a position to do that,” he said.