The current thinking is for the merger to be effected by Flinders acquiring all of the shares of Tasman on the basis of one Flinders share for every two Tasman shares.
Should the merger go ahead, the combined company would be known as Kinetic Materials Corp, and would consolidate Flinders's and Tasman's key assets and technologies in the critical metals arena.
Furthermore, it would bring together a management and board team with deep experience in the discovery, development and marketing of rare earth elements (REEs), which is Tasman's area of operation, and graphite, which is where the Flinders management team's expertise lies.
Blair Way, the president and chief executive of Flinders, is pencilled in to occupy the same roles at Kinetic Materials, while his counterpart at Tasman, Mark Saxon, will assume the role of executive director in charge of Strategy and Technology.
The composition of the rest of the board will be determined at a later date.
Substantial overlap exists between REEs and graphite customers, and both materials are considered critical by the European Commission under the "Raw Materials Initiative", the companies observed in a joint statement.
With both companies currently having market capitalisations of around C$20mln, the combined company will create a larger market presence, while following the merger there will be the opportunity for increased operational efficiency through the sharing of technological, logistical, administrative and marketing functions.
Previous merger talks between the parties were abandoned in May 2014, but both companies have made significant progress on their project portfolios since then.
Flinders has developed the Woxna flake graphite deposit in central Sweden, and the fully-permitted project is now on production-ready status.
Tasman, meanwhile, has published a preliminary feasibility study for its Norra Karr REE deposit in Sweden that confirmed the asset has the capacity to be a long-term producer of the most critical heavy REEs.
"With the benefit of extensive experience in the critical metals sector, the boards of Tasman and Flinders have recognized the opportunity provided by the accelerating shift to low-carbon energy supply and efficient energy storage,” Saxon said.
“A whole new set of metals and materials that provide a higher level of performance are now in demand. This consolidation of companies caters to the future demand for functional materials from environmentally and socially sustainable sources, which we believe provides Kinetic with a very exciting future," he added.
Blair Way, meanwhile, said the combination of Flinders and Tasman to form Kinetic could provide Europe with a potential sustainable supplier of the raw materials required for low-carbon energy generation and storage.
“Should the merger proceed, it is anticipated the combined company will focus on the development and permitting for high purity spherical graphite production at Woxna [Flinders's asset], product development for the array of critical metals and materials available at Norra Karr, and the acquisition of aligned projects and technologies,” Way said.
“With rare earth element prices remaining subdued, expenditure on REE processing at Norra Karr will be on an as-needed basis; however, processing research with the financial support of the European Commission-funded EURARE project shall continue," he added.
Shares in Tasman rose 8.5% to C$0.255 on the news, while the Flinders share price inched lower on its return from suspension to C$0.415 from C$0.42.