Once associated with a share market bubble, the Poseidon name lives on but it could sink from view as a listed company again because of a merger.
Poseidon Nickel (ASX: POS) on Tuesday published documents supporting its proposed merger with Horizon Minerals (ASX: HRZ) Ltd to create a gold producer with assets including nickel deposits at Mount Windarra, about 960 kilometres north-east of Perth.
Under the proposal, which has been recommended by Poseidon’s independent directors and values Poseidon at A$22.2 million, Horizon is offering 0.1156 of its shares for every Poseidon Share and 0.1156 of its new options for every Poseidon option.
The merger would proceed by way of a scheme of arrangement if approved by Poseidon shareholders and if a superior offer is not received, in which case the merged group would trade as Horizon Minerals.
The transaction revives distant memories of the discovery by the unrelated exploration company Poseidon NL of a significant nickel deposit at Mount Windarra in 1969, which sparked a speculative frenzy dubbed the ‘Poseidon boom’ in which the company’s share price surged from 80 cents to $280 in five months.
However after struggling with a range of challenges, Poseidon NL went into receivership in 1974, handing control of the Mount Windarra project to Western Mining Corporation, which produced nickel between 1974 and 1991.
After a number of changes of ownership the project ended up in the hands of the Poseidon Nickel, which revived the famous name when it was founded in 2013 to focus on the exploration and development of nickel projects in Western Australia.
Poseidon Nickel said Windarra was a highly strategic asset with the ability to deliver further shareholder value.
“Despite the current depressed nickel prices the combined entity holds significant nickel resources that could be quickly brought into production with an improvement in the nickel market,” the company said in the Scheme Booklet for the merger.
Poseidon shares last traded at 0.4 cents, which is below the value implied by the Horizon offer of 0.6 cents, having traded between 0.3 and 1.3 cents over the last year.