Tanami confirmed yesterday that it had received a letter from the solicitors of Metals X in relation to the rival deal struck over the project with larger gold producer Northern Star Resources.
 
It comes after Metals X vowed last month to take “all necessary action” to enforce its rights and entitlements.
 
Metals X alleges that Tanami breached the original heads of agreement by negotiating an alternative deal with Northern Star, although Tanami said Northern Star’s offer was unsolicited.
 
According to Tanami, Metals X also alleges that Tanami’s board’s recommendation of Northern Star’s offer was misleading or deceptive as it didn’t take into account the claim for damages Metals X proposes to make.
 
Tanami is obtaining legal advice but said it “specifically disputes” allegations of Metals X.
 
The board specifically disputes that it recommended to Tanami’s shareholders that they should vote for the Northern Star deal and against the Metals X deal, but Tanami said it had merely indicated how the individual members of the board intended to vote.
 
Today, Tanami released the notice of meeting, setting April 13 as the date for the showdown to vote on the rival deals.
 
Metals X was to acquire a 25% stake in Central Tanami for $A11 million cash and around $4.8 million worth of shares, but Northern Star’s copycat deal would see it acquire 25% for $11 million plus $9 million in shares.
 
Under the deal, Metals X would have moved to 75% by sole funding the project to production, while Northern Star’s deal will see it move to 60% by sole funding the project to production, while both deals include put options which would see Tanami exit the project.
 
Assuming a move to 100% of the project, MinesOnline.com estimated the total value of Northern Star’s deal to be around $72.6 million, while Metals X’s would be worth roughly $47.8 million.
 
Tanami’s notice of meeting said Northern Star’s offer was worth $63 million, while Metals X was worth $43 million.
 
Tanami’s largest shareholder Allied Properties Resources, which backed Tanami’s $22 million acquisition of the project in 2010, has confirmed its intention to vote in favour of the Northern Star deal.
 
The mine, formerly known as Groundrush, produced 2.1 million ounces of gold between 1987 and 2005 from 43 open pits.
 
It has a current resource of 2.6Moz gold at a grade of 3.1 grams per tonne gold, including 1.1Moz at 4.49gpt at the Groundrush deposit.
 
Bell Potter estimates capital costs of $75 million for a Central Tanami restart and annual gold production of 140,000oz per annum.
 
Northern Star and Metals X have been the two most prolific acquirers of assets in the Western Australian gold sector over the past 18 months.
 
“Someone at Diggers and Dealers told me, ‘[Northern Star’s] Billy Beament is going around buying mines and you’re stealing the others’,” Metals X boss Peter Cook told MiningNews.net sister publication RESOURCESTOCKS last year.
 
The notice of meeting revealed that Tanami received Northern Star’s unsolicited proposal only five days after announcing the Metals X deal.
 
Tanami shares were unchanged at 2.5c, Northern Star was down 1.4% to $2.12 and Metals X was down 0.4% to $1.18.