Today's AFR:Nickel’s tumble hurts hopes of Western Areas...

Today's AFR:

Nickel’s tumble hurts hopes of Western Areas bump

Nickel’s wild ride has created a $1 billion game of blink out west – and KPMG will go a long way to deciding what happens next.

Six months after Western Areas’ takeover talks began, suitor IGO Ltd is under pressure to increase its offer from $3.26 a share to reflect recent moves in the price of nickel globally.

While Western Areas, advised by Goldman Sachs and Rothschild, was happy with the bid late last year, it’s having second thoughts.The company said it was considering ‘‘implications of this volatility on the market expectations for medium to long-term nickel prices’’ last week – and had independent expert KPMG doing the same.

One week on, and nickel’s price has reversed. But some Western Areas shareholders haven’t got the message, and are still holding out for IGO’s bump. Western Areas stock finished at $3.52 yesterday. Their problem, though, is that IGO isn’t in the mood to change a thing.

The battery metals miner has seen no real competition in bidding; the only real potential thorn in its side was Andrew Forrest’s Wyloo Metals, which owns 9.8 per cent of Western Areas, and which it won over in February.

And IGO’s been willing to walk away from deals in the past. Only weeks ago, it left Glencore standing at the altar when the pair couldn’t agree final terms for the CSA Mine in NSW, while in 2020 it shelved a much smaller $216 million bid for Panoramic Resources after it felt the company’s latter disclosures on its Savannah nickel sulphide hacked value off the company.

So all eyes will be on KPMG’s report, expected in April, which should give all parties enough time to see where nickel lands after March’s mania.And as far as these reports go, this one would be closely read.

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Ash here.

IMHO, the IGO bid was a steal when it was unveiled. I was appalled WSA directors accepted it.

Ni prices have since moved up strongly to reflect the staggering demand ahead for batteries, now clearly proven. Russian sanctions and short-squeezing the mis-judgement of a Chinese player mask the significance of this change.

If WSA is to be taken over I do not expect to capitalise on the short-term gyrations. I do however insist the price on offer properly reflect the enduring value of the business. This number is well above IGO's low-ball offer.

Ash