I thnk the bid needs to be at least $3.40 per WSA to be interesting to the institutional holders. Let's take Perpetual, who owns around 15% of WSA. Perpetual were buying WSA shares all the way up to around $2.60 per share and selling between $2.60-2.75 per share in February 2021 when spot nickel prices were around US$19,000/tonne, about where they are today. You can find this table in the substantial shareholder notice lodged on 12 March 2021.
That means at spot nickel prices they probably have an internal valuation for WSA shares of at least $2.60. I have a somewhat similar view (more positive). The last share price is mostly irrelevant, it depends on what WSA shareholders will accept.
WSA have extremely strategic assets, including the Panoramic block. We know IGO wanted to buyout Panoramic because they tried to take them out. You aren't getting WSA without paying a large control premium to what the shareholders think the company is worth. If you add a standard 30% premium to $2.60 you get $3.40 per share.
As I note in the other thread, If we assume a bid at $1,000m Enterprise Value, then
Add back cash at 30 June of $151m plus $12m from the delayed shipment last quarter = +$163m. Assume they are cash flow neutral this quarter.
Add back the current value of their Panoramic shares = +$70m
Gives $1,233m equity value. Divide by 325.6m fully diluted shares (based on the last 2A release) = $3.79 per WSA share.
Don't be surprised if we see a counter-bid from BHP. If IGO takeover WSA they can then let the Forrestania concentrate offtake deal with BHP roll-off in January 2023, then they have BHP's Nickel West over a barrel.
The shorts are all going to get toasted and are lucky nickel prices fell overnight and the ASX is a dumpster fire this morning. I think this is going north of $3 unless nickel prices fall off a cliff.
