Commodities, News, Nickel

IGO advances takeover talks with Western Areas

Andrew forrest

IGO has confirmed it has started due diligence for a potential takeover of Western Areas which would significantly grow the company’s nickel portfolio.

The company could not confirm if it has moved to a definitive transaction with Western Areas.

“While IGO does not comment on media speculation, the company advises that discussions remain at an early stage with due diligence having commenced in recent days,” IGO stated.

“IGO will progress due diligence over coming weeks, however there is no certainty that a definitive transaction will result once this period of diligence is complete.”

In August, IGO and Western Areas released statements confirming they had entered discussions about a “change of control proposal”.

“Western Areas Ltd has noted media reports published by The Australian Financial Review in relation to a potential transaction involving Western Areas,” Western Areas stated in August.

If the takeover proceeds, IGO would control the Forrestania nickel mine in Western Australia, which is one of the country’s highest-grade mines for nickel.

Nickel is a key part of the world’s clean energy revolution and is essential to electric vehicle manufacturing.

Western Areas owns the Cosmos nickel operation which has a third nickel mine in development.

The company’s market capitalisation sits at $948.84 million at the time of writing.

IGO has repositioned itself as a producer of new technology minerals after divesting its stake in the the Tropicana gold mine to Regis Resources for $903 million earlier this year.

It also finalised $1.9 billion deal to acquire a 49 per cent stake in Tinaqi Lithium’s assets, including a share in the Greenbushes lithium project.

“Right now, the (Tianqi joint venture) has got two assets in it and they’re both here in Western Australia, and importantly they’re world-class, vertically integrated lithium assets,” IGO chief executive officer Peter Bradford said at the 2021 Diggers & Dealers Mining Forum.

“What that means is we’ve got a 25 per cent interest in the Greenbushes mine … it is the world’s lowest cost, highest grade hard rock lithium mine on the planet and we also get a 49 per cent interest in the Kwinana lithium hydroxide refinery, which is the first fully automated lithium hydroxide plant in the world.”

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