Mid-tier gold miner Regis Resources has topped a field of bidders for IGO’s 30 per cent stake in the Tropicana gold mine with what is believed to be a $900 million offer.
But IGO’s joint venture partner and operator of the mine 330km north-east of Kalgoorlie, AngloGold Ashanti, still has 60 days to match the bid under pre-emptive rights.
Regis is understood to be eyeing a $600m equity raising and $300m debt agreement to effect the deal provided AngloGold do not exercise their rights.
Gold Road Resources, Evolution Mining as well as offshore miners were underbidders in the Macquarie-run sale process.
The deal represents more than half the market capitalisation of Regis, which operates the Duketon gold project 130km north of Laverton, comprising the Moolart Well, Garden Well and Rosemont gold mines.
Regis posted a profit of $84.8m in the six months to the end of December on the back of the sale of 172,990oz of gold.
IGO placed its non-operating stake in the 7Moz mine on the market in September, saying it planned to focus on so-called forward-facing battery metals such as nickel, copper and cobalt. The announcement came shortly after the gold price hit a record $US2075/oz.
Talk at the time suggested the stake could fetch north of $1b, but a softening gold price since then is likely to have weighed on the sale price.
IGO has since announced a $1.9 billion deal with China’s Tianqi for a 49 per cent stake in its Kwinana lithium hydroxide plant and a 25 per cent interest in Australia’s premier lithium mine at Greenbushes, 250km south-east of Perth.
AngloGold’s Australian boss Mike Erickson talked up Tropicana at last year’s Diggers & Dealers Mining Forum in Kalgoorlie-Boulder, describing it as a great asset, noting that the South African-based miner knew it better than anyone else.
Mr Erickson also confirmed the company was looking to grow its business in Australia, having divested all of its assets in its native South Africa.
“I think it’s well known that the company likes the Australian jurisdiction,” he said at the time.“We’ve got extremely predictable regulations ... it’s a very good address.”
Earlier today, Gold Road revealed it had made a bid for IGO’s Tropicana stake but said its offer had since expired.
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Ash here.
Serendipitous event just as the market awaits NSW government final approval on Mcphillamys. Duketon, Tropicana (30%) and Mcphillamys together make RRL a formidable miner.
This changes RRL's out-of-the-money hedge book too. If the banks demand hedging to lower their loan risk, there it is already in hand. Further, the extra 110k oz++ from Tropicana gives more optionality to how fast and in what order the hedge book is run off.
Did RRL over pay for the Tropicana stake? Mr Market will tell us tomorrow.
Ash
RRL Price at posting:
$3.17 Sentiment: Buy Disclosure: Held
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