Fundies add Galileo Mining to M&A watch listAnthony Macdonald,...

Fundies add Galileo Mining to M&A watch list
Anthony Macdonald, Sarah Thompson and Kanika SoodJun 6, 2022 – 9.34pm

West Australian cobalt and nickel explorer Galileo Mining has landed on resources investors’ radars, with fundies tipping it as acquisitive IGO’s next potential target.

The Galileo bulls reckon IGO, already sitting on an 8.89 per cent stake, could come calling for the rest of the company if drilling at the junior’s Norseman project turns up a sizeable deposit.

Galileo is all of $318 million market – Fraser Range targets (nickel, copper and cobalt) and Norseman (nickel, palladium and cobalt) – would be right up IGO’s alley. IGO has been seeking to restock its deposit book as production from its Nova mine dips and it has just bought Western Areas to help.

Of Galileo’s two projects, Norseman’s Callisto palladium discovery would be the first out of the gate with drilling results due towards late July.

Of course, West Australian explorers hoping for a bid from IGO is nothing new. But fund managers reckon if IGO were to hunt for something to buy in the Fraser Range close to its Nova mine, Galileo would be the best fit.

There’s two other listed players in the region – Legend Mining and Boadicea Resources – but neither would be as easy a fit.

Legend’s prospects within the Rockford project, which also has joint ventures with IGO and Creasy Group, is yet to yield a deposit. And with Boadicea, fund managers reckon it would make more sense for IGO to buy out the smaller explorer’s share in the projects than to buy the whole company.

Mining billionaire Mark Creasy is all over most of the plays, and particularly Galileo, sitting on a 24.82 per cent stake.

He’s also friendly with IGO, founding the Nova mine and striking joint ventures over the years for patches of exploration land in Fraser Range, including Southern Hills tenements in 2018 and Silver Knight last year. Galileo CEO Richard Underwood worked for Creasy’s many mining ventures in the past, including Silver Knight.

And so investors would also be watching if IGO and Creasy go in together for Galileo.

IGO has gone from making $35 million a year at the EBITDA line just a decade ago to $360 million last financial year.

Its Nova mine produced about 29,000 tonnes of nickel and 13,000 tonnes of Copper in the 2021 financial year. The deposit was discovered in 2012, and production is expected to plunge in the 2027 financial year as the mine life starts to run out, which has been spurring IGO along on the acquisition path.