WSA - Western Areas

Western Areas numbers aren't anything special, it may help the take over move.
From the article:
Western reported an over 16% drop in full-year revenue to A$257.2 million ($185.29 million) and posted a full-year net loss of A$7.7 million compared with a profit of A$31.9 million a year earlier.

The company added nickel sales fell nearly 22% for the year, as production was hit by operational issues at the Forrestania project in Western Australia.

i would definitely prefer scrip ( if either IGO or FMG are successful ) to cash

despite the fact i exited IGO not so long back ( in profit )

RESPONSE TO MEDIA SPECULATION – WESTERN AREAS
IGO Limited (ASX:IGO) (“IGO” or “the Company”) notes recent media speculation regarding discussions between IGO and Western Areas Limited (“WSA”) 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.
IGO is not aware of any other matter requiring disclosure under the ASX listing rules and confirms it is in compliance with ASX Listing Rule 3.1. This announcement is authorised for release to the ASX by the IGO Board of Directors.

DYOR

i hold WSA , FMG and PAN

this could get really complicated here , for example if a scrip component offered would FMG use this as a toehold into IGO

might be worth watching several related companies in this

WSA's renko style chart pre-2008 mining boom looks more like a Mr Squiggle drawing on steroids:

Although not drawn on the above chart for WSA, next level of resistance is at $2.70.

We know LME's nickel inventories are depleting at around 1K tonnes a day, so with almost 100k available in their warehouses supply won't become immediately tight:

If the pace of drawdowns increases then I expect nickel to break its earlier peak this year which, in turn, will prop up WSA and maintain its upward trend. Production-wise WSA's output is expected to be relatively stable until FY27, so aside from metal price upside, it's a long wait for WSA to return to its glory days.

RESPONSE TO MEDIA SPECULATION – WESTERN AREAS

IGO Limited (ASX:IGO) (“IGO” or “the Company”) notes recent media speculation regarding discussions between IGO and Western Areas Limited (“WSA”) regarding a potential change of control transaction. While IGO does not comment on media speculation, the Company confirms that discussions and due diligence are continuing.
There is no certainty that a definitive transaction will result once this period of diligence is complete. IGO is not aware of any other matter requiring disclosure under the ASX listing rules and confirms it is in compliance with ASX Listing Rule 3.1. This announcement is authorised for release to the ASX by Peter Bradford, CEO & Managing Director.

DYOR

i hold WSA

interesting wording .. going for a controlling interest rather than a 100% ownership , perhaps ??

i guess time will tell

divs4ever said:

RESPONSE TO MEDIA SPECULATION – WESTERN AREAS

IGO Limited (ASX:IGO) (“IGO” or “the Company”) notes recent media speculation regarding discussions between IGO and Western Areas Limited (“WSA”) regarding a potential change of control transaction. While IGO does not comment on media speculation, the Company confirms that discussions and due diligence are continuing.
There is no certainty that a definitive transaction will result once this period of diligence is complete. IGO is not aware of any other matter requiring disclosure under the ASX listing rules and confirms it is in compliance with ASX Listing Rule 3.1. This announcement is authorised for release to the ASX by Peter Bradford, CEO & Managing Director.

DYOR

i hold WSA

interesting wording .. going for a controlling interest rather than a 100% ownership , perhaps ??

i guess time will tell

Click to expand...

That would be a hell of a consolidation of WA's nickel assets.

well to my estimation the mining cycle is in the consolidation phase , ( despite the appearance of a current super-cycle )

since Twiggy has a stake in WSA ( just over 5% ,the last i heard ) , i wonder if there is a chance of a IGO/FMG JV on the table

( and last i heard WSA has a 19.9% stake in PAN to boot )

so yes it could be , but would a regulator step in for a look-see ??

divs4ever said:

well to my estimation the mining cycle is in the consolidation phase , ( despite the appearance of a current super-cycle )

since Twiggy has a stake in WSA ( just over 5% ,the last i heard ) , i wonder if there is a chance of a IGO/FMG JV on the table

( and last i heard WSA has a 19.9% stake in PAN to boot )

so yes it could be , but would a regulator step in for a look-see ??

Click to expand...

Add to that the IGO lithium hydroxide plant at Kwinana and BHP's new high purity nickel sulphate plant at Kwinana, put FFI money in the mix and who knows where this could go.
May be a lot of speculation, but a lot of ducks appear to be lining up IMO.

as long as a flock of black swans don't ruin the parade

cheers

as per ..... Shares in nickel miner Western Areas have raced ahead of the IGO Group’s endorsed offer price as investors bet Andrew Forrest or BHP could lob a rival bid.

$3.42 ... and has been trading 3.36 to 3.44 during the day.

Andrew Forrest’s private company Wyloo lifted its stake in Western Areas to 6.29 per cent earlier this month and declined to comment on IGO’s $3.36 per share offer, which values Wyloo’s stake in Western Areas at $67.9 million.

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and BHP could argy-bargy their way in to discussions, via the side door (as Wyloo and BHP are in a tussle for Noront Resources)

IGO and WSA seem very happy to get this done. I was hoping for a much better deal as a holder of WSA. Not sure why the WSA board is so keen to take this offer??

Tyre Kicker said:

IGO and WSA seem very happy to get this done. I was hoping for a much better deal as a holder of WSA. Not sure why the WSA board is so keen to take this offer??

Click to expand...

You ask a very good question.

I've been saying for years this consolidation was and had to happen. For IGO it's about dick swinging rights in Perth and growing the market cap while they are overvalued. For WSA....well have have you looked at the past decade of performance in the share price of WSA? Last few years have been cost increases and dropping production, and they currently spending 300+ million building a new mine - which is actually an old mine that Glencore mothballed. By the time they reach full production, get through likely cost and schedule over-runs this nickel boom may very well have faded again. PAN in a way are doing the exact same thing - restarting a mine they themselves mothballed twice or three times? So there is considerable risk to WSA - one is that their current project fails to deliver, and second is that their investment in PAN fails if PAN fail to deliver.

This is an out for WSA shareholders and board that they likely would never of had...

Why any shareholders invest in IGO at these prices is beyond me. I definitely see a capital raising happening 'to strengthen the balance sheet' or 'fund growth'

IGO SECURES WYLOO COMMITMENT TO SUPPORT ANNOUNCED SCHEME OF ARRANGEMENT TO ACQUIRE WESTERN AREAS

IGO Limited (IGO or the Company) (ASX:IGO) is pleased to announce that Wyloo Consolidated Investments Pty Ltd (Wyloo Consolidated) has undertaken to IGO to vote Wyloo Consolidated’s 31,509,769 shares (representing a 9.8% interest) in Western Areas Limited (Western Areas) in support of the Western Areas board recommended scheme of arrangement between IGO and Western Areas (the Scheme), subject to there being no superior proposal for Western Areas that is unmatched by IGO and the independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of Western Areas shareholders.
Subject to the same conditions, Wyloo Consolidated has also committed to a standstill such that it will not acquire or dispose of any Western Areas shares other than pursuant to the implementation of the Scheme.
The Scheme, which was announced on 16 December 2021 and remains subject to customary Court and shareholder approvals, is expected to be completed by early May 2022. Key elements are as follows:
• IGO to acquire Western Areas for A$3.36 per share for cash consideration
• The Scheme is supported by and has been recommended to Western Areas shareholders by the Western Areas Board of Directors (in the absence of a superior proposal and subject to the independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of Western Areas shareholders)
• The Scheme is now independently supported by each of Wyloo Consolidated and Perpetual Limited, in the absence of a superior proposal, and subject to the other conditions referred to above in respect to Wyloo Consolidated's undertaking and those in Perpetual's voting intention statement (see IGO’s announcement of 16 December 2021 for details).
These independently held shareholdings, when aggregated, represent 24.5% of Western Areas
• IGO is funding the A$1.1 billion transaction with a combination of approximately A$900 million seniorsecured debt facility and existing cash reserves.
Separately, IGO and Wyloo Metals Pty Ltd (Wyloo Metals) have entered into an agreement to jointly evaluate opportunities for nickel downstream processing in Australia. The first stage of this is a study, which is expected to take approximately two years and will be funded 70:30 by IGO and Wyloo Metals respectively.
Following the conclusion of the study, and subject to the parties making a final investment decision, the parties would then form a 70:30 joint venture of IGO and Wyloo Metals respectively to construct and operate a nickel downstream processing facility.
IGO’s Managing Director and CEO, Peter Bradford, commented: “Our transaction to acquire Western Areas is ‘on strategy’ and a ‘sensible consolidation of Western Australian nickel production assets’.
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. “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.
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.”

This announcement is authorised for release to the ASX by Peter Bradford, Managing Director and CEO.

DYOR

i hold WSA ( and FMG )

looks like i will crystallize a loss here

i wonder what happens to the WSA stake in PAN ( i hold PAN as well )

Where will IGO go next with their $3.36 takeover offer:

The so called Expert Panel needs a swift kick up the behind if they think $3.36 now represents fair value.
About the only time it did was when IGO and WSA had their first discussions last year.
Even then it was abundantly apparent to blind Freddy/Frederica that nickel prices were rising firmly and supply was severely constrained.
Here's nickels latest price chart:

I originally posted this as a reply to @sptrawler in the Nickel thread:

... yes, at 1% nickel WSA will not be as profitable as previously. However, its contained nickel pipeline gives it a long life cycle and over a decade of further exploration to add to its resource base:


IGO's offer was never generous as it barely incorporated the hundreds of millions WSA already spent to get to its new growth pipelines, and about $150 million in cash reserves (ie., about 45cps).

UPDATE – WESTERN AREAS SCHEME OF ARRANGEMENT IGO Limited (IGO or the Company) (ASX:IGO) wishes to provide an update in relation to the proposed acquisition of Western Areas Limited (Western Areas) via a board recommended scheme of arrangement as announced to the ASX on 16 December 2021 (Scheme). IGO notes today’s announcement by Western Areas requesting a trading halt.
IGO’s understanding of the primary reason for this trading halt is that the Independent Expert engaged by Western Areas has concluded in its draft Independent Expert’s Report (IER), which IGO has not sighted, that the Scheme is neither fair nor reasonable to Western Areas shareholders and is therefore not in the best interests of Western Areas shareholders and, as a result, the Board of Western Areas intends, based on the terms of the current Scheme, to adversely change its recommendation to vote in favour of the Scheme and terminate the Scheme Implementation Deed with IGO.
IGO will consider all options with respect to the Scheme once the draft IER is received and reviewed. However, there can be no guarantee that the Scheme will proceed. As previously stated, IGO’s valuation of Western Areas and the proposed Scheme consideration of A$3.36 in cash per share were based on IGO’s long term view of the nickel market fundamentals and price. Despite recent volatility in the nickel price, IGO’s long term view on the nickel price has not materially changed.
IGO remains focused on pursuing growth opportunities that deliver value to IGO’s shareholders. While it will assess all options available with respect to the Scheme, IGO will remain disciplined in the execution of all merger and acquisition activity. IGO is advised by Macquarie Capital (Australia) Limited as financial adviser and Herbert Smith Freehills as legal adviser.

divs4ever said:

UPDATE – WESTERN AREAS SCHEME OF ARRANGEMENT IGO Limited (IGO or the Company) (ASX:IGO) wishes to provide an update ....
IGO’s understanding of the primary reason for this trading halt is that the Independent Expert engaged by Western Areas has concluded in its draft Independent Expert’s Report (IER), which IGO has not sighted, that the Scheme is neither fair nor reasonable to Western Areas shareholders and is therefore not in the best interests of Western Areas shareholders and, as a result, the Board of Western Areas intends, based on the terms of the current Scheme, to adversely change its recommendation to vote in favour of the Scheme and terminate the Scheme Implementation Deed with IGO.

Click to expand...

It appears the Independent Expert has come to its senses!
This was never rocket science so common sense seems to have prevailed after all.
For a time it looked like Twiggy was going to intervene and WSA ran above IGO's offer price until his announcement on 17 Feb:

Given today's events it looks very unlikely that WSA shareholders would ever approve of IGO's bid. For those who speculated on this outcome, well done as some good gains are in the wind.

Wow, what a surprise hey!

Serious concerns around the WSA management not understanding the demand that was coming for nickel with the EV revolution.

Simply astounding.

I'm happy for IGO to pay overs for this. The scale will make it a very significant asset and be able to sweep up the juniors who don't have the balance sheet for development. As long as they're not sweeping up the trash.

Western Areas Limited (ASX: WSA) – Request for voluntary suspension

Western Areas Limited (Company) refers to its request dated 5 April 2022 for a trading halt in its ordinary shares.
On 5 April 2022, ASX implemented a trading halt which will end at the commencement of trading on Thursday, 7
April 2022.
Pursuant to ASX Listing Rule 17.2, Western Areas Limited (Company) requests that its ordinary shares be
suspended from quotation from the expiry of the current trading halt.
For the purposes of ASX Listing Rule 17.2, the Company provides the following information:
(a) Purpose for the suspension
The suspension is requested pending an announcement by the Company providing an update as to the
status of the proposed acquisition by IGO Limited (IGO) of all of the fully paid ordinary shares in the Company
by way of a scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) for a cash amount of
$3.36 cash per Western Areas share (Scheme). Importantly, the suspension period will facilitate the
Company and IGO being able to complete the iterative consultation process regarding the Scheme, which
consultation process is required under the Scheme Implementation Deed (SID) between the Company, IGO
and IGO Nickel Holdings Pty Ltd (IGO Nickel).
In accordance with ASX Listing Rules Guidance Note 16: Trading Halts and Voluntary Suspensions, the
suspension is necessary to manage the Company's continuous disclosure obligations under ASX Listing
Rules 3.1-3.1B during the consultation process and is appropriate given the Company anticipates that it may
not be able to make an announcement to satisfy its continuous disclosure obligations until the conclusion of
the consultation process required under the SID. See below under the heading "Further information" for
additional details relating to the consultation process.
(b) Duration of the suspension
The Company requests that the suspension remain in place until the earlier of the Company releasing an
announcement in relation to the Scheme and commencement of trading on Wednesday, 13 April 2022.
(c) No reason
The Company is not aware of any reason the suspension should not be granted

DYOR

i hold WSA