IGO - IGO Limited

[sptrawler]

IGO to do a timely capital raising, while the market is strong, sounds like a good move IMO.

https://www.igo.com.au/site/PDF/64526ddd-2aa1-4a08-87d9-6f942ff00b5d/InstitutionalPlacementandSharePurchasePlan

So it looks as though the raising, is to buy into Chinese owned Greenbushes lithium mine, that would mean IGO have exposure to all the battery materials, interesting play.

Australia's IGO to buy stake in Greenbushes lithium mine from Tianqi - sources

Australian nickel-gold miner IGO Ltd is in negotiations to buy a minority stake worth close to $1.5 billion in a vehicle holding Tianqi Lithium Corp's stake in the Greenbushes lithium mine, sources told Reuters.

www.reuters.com

From the articile:

Australian nickel-gold miner IGO Ltd is in negotiations to buy a minority stake worth close to $1.5 billion in a vehicle holding Tianqi Lithium Corp’s stake in the Greenbushes lithium mine, sources told Reuters.

China’s Tianqi, one of the world’s top producers of lithium chemicals used in electric-vehicle batteries, urgently needs the proceeds from the sale to repay loans that were due for repayment at the end of November.
Representatives for Tianqi and IGO did not immediately return requests for comment. On Monday afternoon, Perth-based IGO requested a trading halt for its shares until Dec. 9, pending a material acquisition.
Tianqi, which alongside Albemarle Corp operates the Greenbushes lithium mine in Western Australia, last week negotiated with its banking syndicate a repayment extension on $1.88 billion of loans that were used to acquire a 23.8% stake in Chilean miner SQM in 2018 and were due Nov. 29.

The acquisition includes a stake in Greenbushes - the world’s largest hard-rock lithium mine - one of the sources said. The second source said it also included other assets, mostly in Australia.

I don't hold, but am interested.

 

[Miner]

IGO to do a timely capital raising, while the market is strong, sounds like a good move IMO.

https://www.igo.com.au/site/PDF/64526ddd-2aa1-4a08-87d9-6f942ff00b5d/InstitutionalPlacementandSharePurchasePlan

So it looks as though the raising, is to buy into Chinese owned Greenbushes lithium mine, that would mean IGO have exposure to all the battery materials, interesting play.

Australia's IGO to buy stake in Greenbushes lithium mine from Tianqi - sources

Australian nickel-gold miner IGO Ltd is in negotiations to buy a minority stake worth close to $1.5 billion in a vehicle holding Tianqi Lithium Corp's stake in the Greenbushes lithium mine, sources told Reuters.

www.reuters.com

From the articile:

Australian nickel-gold miner IGO Ltd is in negotiations to buy a minority stake worth close to $1.5 billion in a vehicle holding Tianqi Lithium Corp’s stake in the Greenbushes lithium mine, sources told Reuters.

China’s Tianqi, one of the world’s top producers of lithium chemicals used in electric-vehicle batteries, urgently needs the proceeds from the sale to repay loans that were due for repayment at the end of November.
Representatives for Tianqi and IGO did not immediately return requests for comment. On Monday afternoon, Perth-based IGO requested a trading halt for its shares until Dec. 9, pending a material acquisition.
Tianqi, which alongside Albemarle Corp operates the Greenbushes lithium mine in Western Australia, last week negotiated with its banking syndicate a repayment extension on $1.88 billion of loans that were used to acquire a 23.8% stake in Chilean miner SQM in 2018 and were due Nov. 29.

The acquisition includes a stake in Greenbushes - the world’s largest hard-rock lithium mine - one of the sources said. The second source said it also included other assets, mostly in Australia.

I don't hold, but am interested.

Frankly the trading halt notice escaped my attention. The announcement made almost end of the trading hours. There was no abrupt change in volume. So the TH was well kept secret.
It has been a complacency for me to avoid watching the strong horses in my stable. IGO is one of them. NCM used to another one, but off late it is limping and time to shoot it.
Returning to Tianqi - interesting. At one time Tianqi funded the expansion and then backed off. If my memory is not failing Mineral Resources had a nice agreement with them letting Tianqi to pay off for their expansion .
But if the trading halt is to get IGO is to buy would be a challenge for a company from metal sector to non metal sector even if Nova is a great plant, Nickel and Lithium are both used for EV. Strategically IGO would be putting all eggs in one basket - to me a different diversification would reduced the risk. Flip side if EV goes like rocket then IGO board will be laughing at me with their returns and so share holders.
So I am staying calm and watch the price change when trading halt is removed.
If market reacts positively and keeps the moment at least 7 days after CR closing date, then I am wrong. If the price lowers down that would mean, I was right.
Either way, I will be gainer with a long standing hold - sell on XR or add up on CR.
Two more days will dictate the direction .

 

[sptrawler]

So I am staying calm and watch the price change when trading halt is removed.
If market reacts positively and keeps the moment at least 7 days after CR closing date, then I am wrong. If the price lowers down that would mean, I was right.
Either way, I will be gainer with a long standing hold - sell on XR or add up on CR.
Two more days will dictate the direction .

$3.75 is a hell of a discount to recent price around $5, as you say it will be interesting to see what happens to the price, when they start trading.

 

[Miner]

Good morning all
Reading AFR this morning : about $800 m equity to support $2 b purchase of Tianqi stake, $100 M for retail and $700 m for instos, at a stock price 10 pc less than market price .
Wednesday will be interesting drama on XR price .

 

[sptrawler]

More info on the history of the Greenbushes lithium deal.

China Loosens Grip on Top Lithium Mine After Boom-Time Stumble

Tianqi Lithium Corp.’s rush to dominate supply of lithium -- the metal that’s key for batteries to power electric cars and back up renewable energy -- has ended in the selldown of its majority stake in the world’s most coveted mine, a blow to China’s ambitions to exert control across the supply...

www.bloomberg.com

 

[Dona Ferentes]

"We have transacted at what we believe is the bottom of the lithium price cycle and on the eve of the explosion of the electricification of transport and disruptive demand for lithium," IGO MD Peter Bradford said. "We do not believe we were the top bidder, but we were prepared to consider a transaction structure that worked for Tianqi and which provided IGO the once in a lifetime opportunity to invest in what is truly a world-class integrated lithium business."

"once in a lifetime" - how often have I heard that!?

 

[Dona Ferentes]

Good morning all
Reading AFR this morning : about $800 m equity to support $2 b purchase of Tianqi stake, $100 M for retail and $700 m for instos, at a stock price 10 pc less than market price .
Wednesday will be interesting drama on XR price .

IGO intends to fund the acquisition by taking on $1.1 billion in debt, raising up to $766 million in new equity and using its cash reserves. The IGO raising launched on Wednesday involves the issue of up to 166 million new shares, or about 28 per cent of the current issued capital. The raising is made up of a $446 million fully underwritten placement at $4.60 and a $320 million 1 for 8.5 pro rata entitlement offer.

IGO considers it a transformative deal for the company as it looks to a future in battery metals and pursues a sale of its 30 per cent in the Tropicana gold mine in WA. Mr Bradford said the proceeds from any sale of the Tropicana stake would be used to pay down debt associated with the Tianqi deal.

 

[sptrawler]

"once in a lifetime" - how often have I heard that!?

Yes it always rings alarm bells for me, very much like an offer that is too good to be true.

One thing I have wondered is, there is no statement as to the resource reserve, or mine life.

 

[Miner]

$3.75 is a hell of a discount to recent price around $5, as you say it will be interesting to see what happens to the price, when they start trading.

the rights price is $4.6 and not $3.75.

Notwithstanding the share price before CR, would suspiciously questionable
Look at the prices 5 days before trading halt - consistently up and up .
I reckon $4.7 was the realistic price then and all jacked up.
2 shares for 17 holding - ambitious.
All would depend on how instos participate and disclosure comes on 11th dec - retail holding is nothing
Wait and see on Friday. My medium term fear is IGO's capability to manage a totally new and unknown business for them, unknown developed culture (sorry but it will not be same culture as a typical Australian or US owned company. Look at CITIC Pacific - looks like you are in a foreign land occupied in Australia. Hope IGO does not land into a foreign land with acquisition.

 

[sptrawler]

I like the idea, but I would like to see more technical reasoning behind the bid, expected return etc.
I only hold MCR and would like to add to battery stocks, I think IGO are well run but a bit more info would be appreciated.

 

[Miner]

I like the idea, but I would like to see more technical reasoning behind the bid, expected return etc.
I only hold MCR and would like to add to battery stocks, I think IGO are well run but a bit more info would be appreciated.

for the amount of money IGO is raising, available information and strategies behind acquisition, IMO ask details. Just battery hype is not alone good enough. where is the plan ? There is a stake of $billion

 

[sptrawler]

for the amount of money IGO is raising, available information and strategies behind acquisition, IMO ask details. Just battery hype is not alone good enough. where is the plan ? There is a stake of $billion

Exactly, lots of money for a minority stake, in an unknown resource size?
It is a bit like the IFL $1.4b bid for MLC, scared me, I just couldn't see where the value was.
I wonder if more info will be forthcoming?

 

[Miner]

Exactly, lots of money for a minority stake, in an unknown resource size?
It is a bit like the IFL $1.4b bid for MLC, scared me, I just couldn't see where the value was.
I wonder if more info will be forthcoming?

Market once again proved my analysis (??) does not align with market expectation.
IGO opened with a big thunder.
Already made up my mind yesterday. Sold out 75 pc of my holding to get some gun powder.

 

[sptrawler]

The pick up on the raising, is a nice gain, well done @Miner

 

[Dona Ferentes]

Now a $6billion company

there is a "Response to Media Speculation" note out today:

IGO Ltd notes recent media speculation regarding discussions between IGO and Western Areas Limited regarding a potential change of control transaction. 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 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.

And from the Media:

It is understood the nickel/copper miner finally got access to Western Areas books mid last week, and was given about four weeks to try to turn its indicative $1 billion odd offer into something more serious.

IGO is expected to run a deep dive study on Western Areas new Odysseus mine, which is due to produce its first nickel concentrate next year and run for the next decade or so. Odysseus production profile could fit neatly with IGO's Nova - the former would hit its stride as the latter reaches maturity - and form another pillar in IGO strategy to be a globally relevant producer of metals used by the clean energy sector.

From the outside, IGO reckons it could work and lobbed a $1 billion odd scrip heavy offer in August. The question is whether Odysseus looks as good from the inside.

 

[Sean K]

Been over a month that IGO have been looking at WSA's books. Nada.. zzzzzz

 

[Sean K]

Looks like $10.00 has firmed as support, for now.

 

[sptrawler]

IGO to buy WSA for $1.1bn, interesting.

NoCookies | The Australian

www.theaustralian.com.au

 

[divs4ever]

i will await the details but half expect i will crystallize a loss here ( i would prefer a scrip deal if it is offered )

 

[divs4ever]

IGO TO ACQUIRE WESTERN AREAS LIMITED VIA BOARD RECOMMENDED SCHEME OF ARRANGEMENT

Transaction Highlights
• IGO Limited (IGO) and Western Areas Limited (WSA) have entered into a Scheme Implementation Deed (SID) pursuant to which IGO will acquire 100% of WSA via a Board recommended scheme of arrangement
• Consideration of A$3.36 per WSA share, to be paid 100% in cash
• Transaction implies a value of A$1,096 million for WSA on a fully diluted basis and will be funded from IGO’s existing cash reserves and a new A$900 million senior-secured debt facility
• Transaction consideration reflects a premium of 3.7% to close and 35.5% to the undisturbed price of WSA on 18 August 2021 of A$2.48 (the day before the fact discussions had commenced were announced to ASX)
• For IGO shareholders, the transaction delivers an enhanced nickel portfolio aligned to strategy, with the cash funding structure resulting in no dilution to IGO shareholders. The transaction represents a logical consolidation of the Western Australian nickel sector and is expected to be free cash flow accretive to IGO by FY24
• WSA shareholders will benefit from the certainty of a Board recommended, cash transaction at a significant premium to WSA’s undisturbed share price as well as a significant premium to the consensus average broker valuation. Transaction Overview IGO Limited (ASX: IGO) (IGO or the Company) is pleased to announce that it has entered into a Scheme Implementation Deed (SID) to acquire 100% of Western Areas Limited (ASX: WSA) (WSA) for A$3.36/share, payable in cash, pursuant to a proposed scheme of arrangement (the Transaction).
The Transaction values WSA at A$1,096 million on a fully diluted basis. WSA’s Board of Directors unanimously recommend that WSA shareholders vote in favour of the Scheme, and each WSA Director intends to vote their WSA shares in favour of the Scheme (in the absence of a superior proposal and subject to an independent expert concluding that the Scheme is in the best interests of WSA shareholders).
The proposed Transaction is subject to WSA shareholder approval and court approvals. Perpetual Limited (Perpetual) (which currently owns 14.7% of the Western Areas shares) has confirmed to IGO that, if the Scheme proceeds, it intends to vote all of the shares in Western Areas that it holds (directly or indirectly) at the time of the Scheme meeting in favour of the scheme, in the absence of a superior proposal or offer to acquire any of the Shares held by Perpetual, and subject to Perpetual continuing to consider the Scheme to be in the best interests of its member. For the avoidance of doubt, Perpetual has confirmed to IGO that this intention statement:
• does not prohibit Perpetual from selling any of its Western Areas shares, in its absolute discretion, prior to the Scheme meeting; • is only valid until 6 months after the date of this announcement or earlier if IGO decides not to pursue the Scheme; and
• will be subject to Regulatory Guide 25 (RG25) published by the Australian Securities and Investments Commission ASX RELEASE Page 2 Transaction Benefits The Transaction will deliver benefits to both IGO and WSA shareholders. For IGO shareholders, the Transaction delivers significant benefits summarised below:
• Transaction is aligned with IGO’s strategy focused on metals critical to clean energy
• Cash consideration resulting in no dilution for IGO shareholders. Transaction consideration to be funded via existing cash reserves and a new debt facility.
• Transaction is expected to be strongly free cash flow accretive from FY24 once the ramp up of the Odysseus underground mine is complete
• Enhanced nickel portfolio and asset diversification with a combined portfolio spanning nickel and lithium including Nova, Forrestania, Cosmos, Greenbushes, Kwinana and Cosmos
• Strategic and logical consolidation of Western Australian nickel assets with opportunities identified to unlock cost savings and future offtake synergies while also enhancing future downstream processing optionality
• IGO’s nickel expertise and financial strength to maximise value of WSA’s portfolio via nickel development expertise combined with a strong balance sheet to de-risk and fund development of Odysseus, progress the Mt Goode PFS and continue to exploit the WSA exploration portfolio. For WSA shareholders, the Transaction delivers certain consideration at an immediate premium to last close and a significant premium to the undisturbed trading price on 18 August 2021 (the day before the fact that IGO and WSA were in discussions was announced to the ASX);
• a 3.7% premium to WSA’s last close on 15 December 2021
• a 35.5% premium to WSA’s undisturbed share price on 18 August 2021.
IGO’s Managing Director and CEO, Peter Bradford, commented: “IGO’s acquisition of WSA is a logical consolidation within the Western Australian nickel landscape and further positions us on our journey to become a globally relevant supplier of metals critical for enabling a clean energy future. Both Forrestania and Cosmos are high-grade, low-cost nickel sulphide operations and this acquisition, together with our existing world class Nova nickel-copper-cobalt operation, will consolidate our position as Australia’s leading independent nickel producer.
The unique synergies that will be unlocked across a combined Western Australian nickel hub, combined with the potential downstream optionality that this transaction brings, is expected to generate substantial value for IGO shareholders over the long term.” Overview of WSA WSA is an Australian-based mining and exploration company with a portfolio of operating and development stage nickel mines.
It owns a 100% interest in the Forrestania Nickel Operation (consisting of the Flying Fox and Spotted Quoll underground nickel mines) and the Cosmos Nickel Operation (Cosmos), both located in Western Australia. In FY21, WSA’s Forrestania Nickel Operation, located 400km east of Perth in Western Australia, produced 16.2kt nickel at a cash cost of A$4.23/lb nickel1 through the Cosmic Boy concentrator which has a nameplate processing capacity of 550ktpa of ore and produces concentrate grades of between 15% to 16% nickel.
WSA is also developing its second operational hub via the Odysseus Development Project (within the wider Cosmos Nickel Operation), a long-life, low-cost nickel mine with a greater than ten year mine life, which is strategically located between BHP Nickel West’s Leinster and Mt Keith mines.
First ore from Odysseus is expected to be produced in FY22 and commence nickel concentrate production in FY23. 1 Per pound of nickel, payable terms are not disclosed due to confidentiality conditions of the offtake agreement ASX RELEASE Page 3 In addition to its existing operations and development assets, WSA has a substantial exploration portfolio, with activities focused on the Western Gawler Project in South Australia and the Metal Hawk and Mt Alexander joint ventures in Western Australia.
Near-mine exploration initiatives at Forrestania and Cosmos are also being progressed. WSA also owns a strategic 19.9% of ASX-listed Panoramic Resources Limited, operator of the Savannah Nickel mine as well as strategic stakes in Grid Metals Corporation (5.5%) and Metal Hawk (6.6%). As at 30 June 2021, WSA has a total JORC 2012 compliant Ore Reserves of 13.3Mt @ 2.1% and Mineral Resources of 84.9Mt @ 1.1%2.
Transaction Funding The Transaction consideration implies a value of A$1,096 million for WSA on a fully diluted basis. Transaction costs, inclusive of stamp duty, are estimated to be A$76 million. IGO intends to fund the Transaction and costs through a combination of (i) a new A$900 million senior-secured debt facility underwritten by ANZ, CBA and NAB, comprising a A$540 million amortising facility and A$360 million revolver, both with a maturity date of 30 April 20253, and (ii) from IGO’s existing cash reserves of A$552 million4 for the remaining balance. Upon completion of the Transaction, IGO will assume WSA’s existing cash reserves of A$148 million5. IGO expects to fund the continued development of Cosmos through a combination of existing cash and operating cashflows. Transaction Conditions The Transaction will be implemented by way of a scheme of arrangement (Scheme) to be proposed by WSA.
The terms upon which IGO and WSA will implement the Transaction are set out in the SID. Key conditions of the Transaction include:
• Approval being obtained from shareholders of WSA and Australian court approval in relation to the Scheme
• The Independent Expert concluding that the Transaction is in the best interests of WSA shareholders, and not changing that conclusion or withdrawing its report; and
• Other conditions customary for a public transaction of this nature. In addition, IGO has termination rights in the event of a material adverse change, prescribed occurrence or regulated event (each as defined in the SID) occurring in relation to WSA. The SID includes customary exclusivity arrangements including “no shop” and “no talk” restrictions notification obligations and matching rights for IGO as well as market standard terms and break fees.
Full details of the terms and conditions of the Scheme are set out in the SID, a copy of which was released by Western Areas today. Timetable Further details of the timetable will be provided in due course however the Transaction is targeted for completion in April 2022. Advisers IGO is advised by Macquarie Capital (Australia) Limited as financial adviser and Herbert Smith Freehills as legal adviser. This announcement is authorised for release to the ASX by the IGO Board of Directors.

DYOR

i hold WSA and PAN , looks like i will be crystallizing a loss even if a superior bid comes in

at least Macquarie Capital scores a few bucks ( i hold MQG 'free-carried ' )