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The company is offering one Metallica share for every 22 Queensland Ore shares, which Metallica says values the small company at around $2.3 million based on Metallica's closing price yesterday.
Shares in Metallica were last trading unchanged at 23c after a 2.5c fall yesterday, while Queensland Ores were last at 1.2c, up 0.5c or 74% today on the back of the Metallica offer.
Metallica said the offer represents a 49% premium to Queensland Ore's share price and is 25% higher than a competing takeover offer from Outback Metals.
Last month, Outback offered one of its shares for every 4.79 Queensland Ores shares.
The deal will offer Queensland Ores shareholders exposure to Metallica's $20 million in cash which will help keep Queensland Ores afloat.
Late last year Queensland Ores shut down operations at its Wolfram Camp tungsten-moly mine in North Queensland.
The Queensland-based company said at the time it was suspending operations at the mine to conserve cash while it addressed mining and metallurgical issues, including low recoveries in the treatment plant and the mine's inability to meet target head-feed grade.
After the shutdown, Queensland Ores reported a loss of $35 million for the last half of 2008, with only $835,000 in cash on hand.
Late yesterday Metallica said it would evaluate Queensland Ore's assets - without spending too much money - until an improvement in commodity prices which could see Wolfram Creek re-commissioned.
Queensland Ores also has a number of exploration tenements, including the Mount Cannindah copper-gold project.
Post-acquisition, Metallica said it would have a portfolio of Queensland assets across a number of commodities including nickel cobalt, coal, bauxite, gold, copper and molybdenum.
The company recently put work on its flagship NORNICO nickel laterite project on ice due to the struggling nickel price.
The company was carrying out feasibility studies on a 1 million tonne per annum heap leach operation at the project, which Metallica said could be quickly restarted once conditions improved.
Metallica also has a 32% share of newly-listed Cape Alumina.
