Independence Group’s takeover offer for Panoramic Resources is set to be rejected by the target’s key shareholder, Zeta Resources.
ASX-listed Zeta has described IGO’s off-market takeover offer as “unsolicited” and “opportunistic”.
IGO launched its takeover offer for Panoramic at a time when the proper value for the full ramp up of mining at the Savannah nickel-copper-cobalt in the Kimberley region of Western Australia has not been achieved, according to a Zeta statement.
“The capital funds needed to complete the ramp up have only just been invested in Panoramic,” Zeta added.
“IGO is being opportunistic by launching an all-share offer for Panoramic at a time when Panoramic has completed most of the difficult preparatory work before reaching the Savannah North ore.”
Panoramic has encountered issues during the Savannah production ramp up, including a seismic event in July and ongoing rehabilitation.
Zeta claimed IGO was using its relatively inflated share price to sell its shares to purchase the shares of Panoramic at a relatively deflated price.
IGO is offering one share for every 13 Panoramic shares, valuing the target at $312 million.
Zeta is confident the long-term outlook on nickel prices is positive, and believes Savannah North is an attractive and strategic asset, adding that it wasn’t surprised that IGO shared this view.
“It is obvious that the restart of mining at Savannah has not been trouble free. However, … Zeta Resources is a patient investor, interested in increasing value … and providing access to capital when needed,” the company stated.
Zeta believes its exposure to nickel would be reduced if it accepted the IGO offer.
The board of Panoramic has advised shareholders to take no action until it has evaluated the bid.
IGO has not been successful in engaging Panoramic’s board on a deal to change control, before presenting the offer directly to the target’s shareholders.