Tony Sage-backed Cauldron Energy's proposed takeover of uranium hopeful Energia Minerals may be scuttled before takeoff, with Energia's major shareholder indicating the offer "substantially undervalues" the uranium company.
The unsolicited approach from Cauldron Energy yesterday surprised market analysts, with Cauldron offering one of its shares for eight Energia shares - valuing Energia at 3.4c a share.
If given the go-ahead, the tie-up would create a new Pilbara-focused uranium play with a current combined resource of more than 30 million pounds - making it WA's fourth biggest uranium project.
Cauldron's Yanrey uranium project would join Energia's Carley Bore uranium find, which sits just to the south.
Both companies also sit next to Paladin Energy's Manyingee uranium project - WA's sixth biggest deposit - still in its infancy.
However insiders said yesterday the deal was unlikely to go ahead. This was backed by 22 per cent Energia major shareholder Uranium Equities, which indicated it would move against the deal.
Uranium Equities chairman Tony Kiernan told WestBusiness yesterday the takeover appeared to significantly undervalue Energia.
Adelaide-based Uranium Equities bought into Energia - headed by former Kagara chairman Kim Robinson - in October through a rights issue and private placement at 3.5Â¢ a share.
Brisbane-based Carbon Energy is Energia's second-biggest holder with 16.5 per cent. Carbon was contacted for comment.
Both projects are still in the drilling phase, with Carley Bore hosting a resource of 16.7 million pounds. Cauldron recently increased its resource at Yanrey from 4.8mlb to 15.7mlb.
Cauldron Energy shares rose 1c to 28c yesterday.
Energia shares gained 0.8c, or 30 per cent, to 3.4c.Cauldron chairman Tony Sage said the takeover would create a new uranium province. He said both Cauldron and Energia had huge exploration and corporate synergies.
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