Saturday, 29 September, 2007

by Cameron England
The Herald Sun

TORO Energy's $400 million merger with Nova Energy moved a step closer yesterday, with major shareholder Agincourt Resources tipping in its 57 per cent stake yesterday.

The move puts Toro's interest in Nova at 60.2 per cent, giving it a commanding blocking stake, should any other offer be considered.

This is unlikely, however, with Toro and Nova sharing Oxiana as a major shareholder, with Oxiana picking up its Nova stake when it bought Agincourt in April.

Fellow major shareholder Argonaut, which owns 5.96 per cent of Toro, has said "in the absence of a superior offer and subject to acceptances from Nova shareholders causing Toro's relevant interest in Nova shares to be at least 80 per cent (inclusive of Argonaut)".

Toro is offering 5.5 of its shares for every Nova share, in a deal which would create one of Australia's largest uranium explorers, based in Adelaide.

Toro managing director Greg Hall said at the time the merger was announced that consolidation in the uranium industry was sorely needed.

"There has been $8.9 billion worth of uranium mergers and acquisitions globally in the first half of this year compared to just $400 million worth in all of 2006," he said.

"The heightened 2007 consolidation has included more than $1.02 billion of activity in the Australian uranium sector.

"The Australian uranium sector (excluding Paladin and ERA) is valued at less than $2.8 billion and future target companies and uranium deposits will become less available.

"Without the necessary market capitalisation to participate, both Toro and Nova will miss growth opportunities, whereas the merged group will have the scale to play an active role in sector consolidation in parallel with a greater ability to fast-track project development."

Toro is focused on South Australia and the Northern Territory while Nova has SA, NT and Western Australian prospects. Nova has also begun a pre-feasibility study at its Lake Way deposit in WA.

Both companies also have African interests, with Toro looking for uranium in Morocco and Nova in Namibia.

Toro shareholders will vote on whether to approve the merger at a meeting on Friday.

Adelaide's Minotaur Exploration, with 36 million shares, will control 7.3 per cent of the new company if the merger goes ahead.

Toro closed steady at 81 and Nova was up 25 at $3.70.