Diversified Critical Metals Company on the Horizon: Flinders and Tasman Metals Announce Possible Merger PlansWhat happens when you take two Europe-focused critical metals companies like Flinders Resources (TSXV:FDR) and Tasman Metals (TSX:TSM) and merge them together?

You get a diversified critical metals company with the potential to supply Europe’s high-growth technology sector with the materials it needs.

The players

Graphite investors might be familiar with Flinders Resources’ Woxna brownstone graphite project in Central Sweden. Woxna is a fully permitted past-producing mine with a processing plant capable of 100,000 tons per annum and a mine capable of producing 10,000 tons of high-quality graphite per year. In mid-November, Flinders’ board approved the company’s production plan for Woxna, bringing the project one step closer to production and the company one step closer to being the first public company to produce graphite on a commercial scale. Flinders is aiming for flake graphite production by the end of Q3 2014.

Critical metals investors are certainly familiar with Tasman Metals, a company focused on developing strategic metals targets like its flagship rare earth project, Norra Kärr, located in Southern Sweden. The company also has a few other rare earth projects on the go, and recently acquired several tungsten projects — also in Sweden — including Yxsjöberg, the former largest tungsten-producing project in Northern Europe.

The merger

Both companies announced today that preliminary negotiations relating to a possible merger are taking place. Under the terms being considered, Tasman may acquire all the outstanding common shares of Flinders for consideration of common shares of Tasman on a to-be-determined share exchange ratio. To date, the companies have not hammered out all the details; however, they have stated that “[t]he Potential Merger is subject to a range of conditions, including, but not limited to, an agreement between Flinders and Tasman on the appropriate Ratio based on the guidance of their respective financial advisors, and Tasman and Flinders entering into a binding definitive agreement containing customary terms, including representations and warranties, as are standard in a transaction of this nature.”

Commenting for Tasman Metals, CEO Mark Saxon stated that ”[t]he contemplated merger of Tasman and Flinders would bring together a portfolio of assets that fits very well with the needs of European industry.” He believes the unique nature and excellent potential of the Nordic rare earth, tungsten and graphite assets speak for themselves. “We believe the proposed business combination will assist in our goal to become the “supplier of choice” for secure and ethically sourced critical materials to Europe,” he said.

Echoing the positive sentiment, Flinders CEO Blair Way said in a company statement, “[w]e believe Flinders’ near term cash flow, project development and operational expertise can support the next stages of Tasman’s growth, while the addition of a major asset like Norra Kärr would provide Flinders’ shareholders with exposure to another significant critical metal asset. The proposed combined company has the opportunity to become a sector leader, with potential to grow by adding aligned assets to this larger critical metal business.”

Tasman and Flinders will keep investors appraised of any further information about the potential merger, and stress that no definitive agreement has yet been reached.


Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.