Independence Group (IGO) plans to strengthen its nickel portfolio after making an off-market takeover bid for Panoramic Resources.
IGO has presented the offer directly to Panoramic’s shareholders after a number of unsuccessful attempts to engage with the target’s board on a deal to change control.
The proposed offer is equal to one IGO share for every 13 Panoramic shares, valuing the target at $312 million. At 47.6 cents per Panoramic share, the deal represents a 42 per cent premium on the target’s closing price on November 1.
Panoramic’s key asset is the Savannah nickel-copper-cobalt mine in the Kimberley region of Western Australia, a site it restarted at the start of 2019 after almost three years on care and maintenance due to low commodity prices.
IGO’s offer is consistent with its focus on metals critical to clean energy including nickel and copper, the company reported in an ASX statement announcing the proposal.
Perth-based IGO believes an extensive capability in underground mining, processing and exploration of nickel sulphides places it in an ideal position to unlock value from the Savannah operation and Panoramic’s exploration portfolio.
IGO’s track record of mine development and operational performance is highlighted by the development of the Nova underground nickel mine in Western Australia within five years of discovery.
Peter Bradford, managing director and chief executive of IGO, said the offer represented a rare instance of genuine and mutual benefit for both companies.
“Panoramic shareholders will be able to crystallise future value from Savannah at a very attractive price and retain exposure to its upside potential, while also gaining exposure to Nova and Tropicana and IGO’s extensive portfolio of belt-scale exploration projects prospective for nickel and copper,” Bradford said.
“The company remains leveraged to the nickel market and we believe IGO has the financial, operational and technical capability to fully unlock value from Savannah and Panoramic’s exploration portfolio.
“Given our unique positioning as Australia’s largest independent producer of nickel, to unlock value at Savannah, we have decided to provide the offer for the consideration of all Panoramic shareholders.”
Panoramic acknowledged the bid on the ASX this morning, describing it as an unsolicited, highly conditional scrip takeover offer.
The company’s board advised shareholders to “take no action” until it has evaluated the bid.
Since restarting the Savannah operation, Panoramic has struggled to ramp up production at the site to reach its budgeted rates due to a number of reasons, including a seismic event in July and ongoing rehabilitation at the site.
IGO set out a number of conditions for the deal that it stated were necessary to confirm the status of operating performance at Savannah.
It has included these conditions following Panoramic’s recent quarterly report and due to the lack of engagement from the company’s board when approached about the proposed bid.