IGO has received the support of Andrew Forrest’s Wyloo Consolidated Investments in its takeover of Western Areas.
Wyloo has committed to its 9.8 per cent interest in Western Areas as part of the takeover, a significant milestone for IGO as it looks to complete the acquisition by early May 2022.
Complementing Wyloo, IGO also has the backing of the Western Areas board and financial services company Perpetual Limited in its bid which equates to $3.36 per Western Areas share. Wyloo and Perpetual make up 24.5 per cent of Western Areas’ current ownership.
IGO will fund the $1.1 billion transaction through a combination of existing cash reserves and a senior-secured debt facility worth approximately $900 million.
The acquisition will see IGO control the Forrestania mine in Western Australia, one of the country’s highest-grade nickel mines.
Western Areas also owns the Cosmos nickel operation in WA, where it is currently developing its Odysseus mine, which is on track to deliver first concentrate in the December quarter of 2022.
“Our transaction to acquire Western Areas is on strategy and a sensible consolidation of Western Australian nickel production assets,” IGO managing director and chief executive officer Peter Bradford said.
“The transaction delivers price certainty to Western Areas shareholders and is accretive to IGO shareholders. We are therefore pleased to have secured Wyloo Consolidated’s support for the scheme of arrangement.”
Separate to the acquisition, IGO and Wyloo Metals have teamed up to jointly explore opportunities for nickel downstream processing in Australia.
The first stage of the agreement will involve the completion of a study and be funded 70:30 by IGO and Wyloo, respectively.
From there, subject to both parties making a final investment decision, IGO and Wyloo will enter into a respective 70:30 joint venture to construct and operate a nickel downstream processing facility.
“Looking forward, our agreement with Wyloo Metals to investigate and, if economically feasible, advance development of a downstream nickel processing facility represents a great opportunity to progress Australia’s relevance in the battery metals supply chain,” Bradford continued.
“IGO and Wyloo Metals have each had an aspiration to evaluate the potential for downstream nickel processing in Australia and our joint initiative is a step towards realising the ambitions of both companies.”