5 March 1998: Further to GlassOnline“s reports of 12 February “98 and 19 February “98, analysts say that the merger of Sons of Gwalia (SOG) and Gwalia Consolidated could make the new gold-tantalum-…
5 March 1998: Further to GlassOnline“s reports of 12 February “98 and 19 February “98, analysts say that the merger of Sons of Gwalia (SOG) and Gwalia Consolidated could make the new gold-tantalum-lithium company a takeover target. Analysts have said that with diversified revenue of A$ 400 million, it will be one of the more significant local mining houses and therefore, “attractive for predators”. In recent press reports, under the scheme of arrangement still waiting to be approved, Gwalia Consolidated shareholders will receive two shares in SOG and 70 cents in cash for every seven Gwalia shares. Gwalia is to distribute its 17.9 million shares in SOG to its own shareholders and Gwalia assets will then be consolidated into the balance sheet of SOG. Some brokers reportedly have endorsed the restructuring, although others have commented that shareholders who held SOG because of its gold mines might find the diversified minerals company less attractive. The merged company is expected to sell many of its minor assets once the appropriate approvals have been gained. Its greater size will mean there will be less interest in small ventures.The new operation is also expected to bring together contrasting industries, the transparent gold market and the esoteric, secretive tantalum market. Tantalum, the main product from Gwalia Consolidated, is in strong demand in electronics, but the contracts that the company has with its two main customers are secret. Cabot Corp. and the German company Starck, a subsidiary of the chemical giant Bayer, have long-term contracts with Gwalia Consolidated which give assurances of markets and prices at least until the year 2003. These sales are estimated to be worth A$ 350 million, but the actual volumes and prices are supposedly secret.