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UPDATE 2-Australia's Independence chases more nickel with $216 mln bid

Published 04/11/2019, 01:37 pm
© Reuters.  UPDATE 2-Australia's Independence chases more nickel with $216 mln bid
IGO
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* Deal values Panoramic at $216 million

* All-scrip offer at 42% premium to last close

* IGO says has the capacity for 4-5 projects

(Adds Panoramic comment, analyst comment)

By Melanie Burton

MELBOURNE, Nov 4 (Reuters) - Australian nickel miner Independence Group IGO.AX on Monday launched a hostile A$312 million ($216 million) takeover bid for smaller peer Panoramic Resources and said it had appetite for more, given demand for new energy metals.

IGO made an all-scrip offer for the 96.2% of shares in Panoramic Resources Ltd PAN.AX it does not already own, pitching the bid at a steep 42% premium to Panoramic's closing price on Friday.

Panoramic shares surged on news of the offer before easing slightly to A$0.443, about 7% below the implied bid price, suggesting investors believe the deal could still face hurdles. Independence shares were steady. Shares in small miner Mincor Resources MCR.AX jumped 9 percent.

"The acqusition of Panoramic is strongly aligned with IGO's strategy," said Chief Executive Peter Bradford, pointing to growing global demand for nickel for use in electric vehicles.

"We haven't put a cap on our capability ... four to five operations would be in line with our strategy," he told an investor briefing.

Western Australian nickel sulphide deposits have been seen as attractive assets amid an expected boom in batteries for electric vehicles. BHP Group BHP.AX BHPB.L is building a nickel chemicals plant in the state.

Panoramic, which has an existing mine and prospects for growth nearby, advised shareholders to take no action while it evaluated the offer.

IGO said that it hadn't directly engaged with top shareholder, Bermuda-based hedge fund ICM Ltd, which holds a 34.7 percent stake in the company.

"In our view, the takeover offer makes strategic sense and aligns with IGO's strategy of increasing nickel production (and exposure to clean energy metals)," broker RBC said in a report

Independence Group said it would offer one of its shares for every 13 Panoramic shares, implying an offer price of 47.6 Australian cents per Panoramic share.

The miner said it was reaching out directly to Panoramic shareholders after a number of unsuccessful attempts to engage the company's board in talks on a change of control.

The offer comes a few days after Independence Group won improved terms in two recent offtake agreements for concentrate from its Nova mine, strengthening its position in the nickel market. month, Independence Group reported a near 120% rise in net profit for the first quarter compared with the previous quarter. = 1.4470 Australian dollars)

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