"Rather, Tap observes that the Expert valued Arc by incorporating a significant value (84%) for the exploration assets of Arc," Tap said. "Tap also has significant exploration value and believes this was not appropriately addressed by the Independent Expert in arriving at its valuation of Tap."

Tap said according to the Independent Experts, the value of Arc's net assets excluding exploration is just 16 per cent of its total valuation. The remaining 84% of the valuation is made up of the exploration assets with the Hovea field making up just over half of the exploration asset valuation (58%).

With that in mind, Tap told Arc shareholders they face considerable risks should Hovea-2 prove to be inconclusive or unsuccessful and that this risk would be considerable reduced by a merger. "Tap is, based on present circumstances, prepared and able to sustain the search without raising additional capital," the company said.

Tap said it believes there are three main risks Arc shareholders face if they do not accept its offer. These include the Target Statement's valuation of the Hovea Field not being achieved, the risk of a falling share price in the absence of Tap's offer and thirdly, the possibility that Arc would not be able to fund its ongoing exploration program without diluting its stock through a capital raising.