Gold Road Resources is thought to be most motivated to buy the asset 330km northeast of Kalgoorlie.
The listed Gold Road Resources, run by Duncan Gibbs, has a market value of just over $1bn and its main asset is a 50 per cent interest in the Gruyere gold mine in Western Australia which it owns in conjunction with the mine’s operator, Gold Fields.
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Like the Gruyere stake, the 30 per cent Tropicana stake on offer in the Macquarie Capital-run auction is a non-operating interest.
Market analysts believe an acquisition makes sense for Gold Road, which typically calls on RBC for advice and has recently increased its funding facility.
Tropicana is the fourth-largest gold mine in Australia.
The listed IGO is putting its stake up for sale as it concentrates more on commodities used for clean energy, such as electric vehicle batteries.
In December, it purchased half of the Australian assets of Chinese group Tianqi for $1.9bn.
Assets include a 24.99 per cent stake in the Greenbushes lithium mine south of Perth, which last year produced 21 per cent of the global supply of the commodity, and 49 per cent of a newly built lithium hydroxide refinery at Kwinana in Perth’s southern suburbs.
The $4.8bn IGO also owns the nickel, copper and cobalt project Nova in Western Australia.
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However, whether Gold Road or other mid-tier mining groups are successful in the contest depends on whether the asset’s existing owner, AngloGold, exercises its pre-emptive rights.
The first gold from the Tropicana mine is poured in 2013.
Tropicana is considered to be AngloGold’s best asset and the South African group has very tight pre-emptive rights in place.
It also owns mining projects in Africa and South America.
Market analysts say AngloGold is the logical buyer of the remaining interest, but the company has recently changed its chief executive and chairman and is more cash-conservative with additional debt, which could see it sidelined.
The mine produces strong cashflow, but is considered to be mature.
Analysts believe Ramelius Resources could be interested as it has aspirations to expand, but would prefer to own an operating stake and buy an asset it can improve.
St Barbara, which is in transition with a new chief executive, is not to be ruled out.
A move by Evolution Mining would be surprising, given the asset is not higher quality than its existing portfolio.
Another possible buyer could be Silver Lake, which is eager to expand, but it is also keen to buy a mine it can operate and improve.

Most Australian-listed mid-tier players are understood to have signed an information memorandum on the sale and it is understood that a number have been deliberating on whether or not to enter the contest.
West Australian mining entrepreneur Mark Creasy owns 16.18 per cent of IGO, according to Bloomberg data, and he is among those on the register lobbying for a sale to extract short-term value.
The sale comes at a time that the gold price remains high and there is a view that the asset is undervalued by the market.
For the 2021 financial year, IGO’s 30 per cent interest is expected to represent some 380,000 to 430,000 ounces of gold produced from Tropicana.
BRIDGET CARTER

DATAROOM EDITOR
Bridget Carter has worked as a writer and editor for The Australian’s DataRoom column since it was launched in 2013, focusing on capital markets, mergers and acquisitions, private equity and investment banking.... Read more

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