PERTH (miningweekly.com) – Battery minerals miner Independence Group (IGO) has increased its offer price for nickel producer Western Areas from A$3.36 a share to A$3.87 a share.

IGO last week flagged concerns that its takeover offer for Western Areas would not proceed after an independent expert found that the offer was neither fair nor reasonable, and not in the best interest of shareholders.

IGO said on Monday that a consultation process has resulted in the parties agreeing to increase the scheme consideration to A$3.87 cash per Western Areas share and amend the scheme implementation deed accordingly.

IGO has declared that the increased scheme consideration is its last and final offer, in the absence of a superior proposal.

“Since first announcing the initial scheme in late 2021, we have observed continued strong nickel price performance and the subsequent impact on valuations of companies operating within the sector. Notwithstanding our view that the recent extreme trading and volatility in the nickel market will be short term in nature, IGO recognises that these higher prices have resulted in stronger financial performance from Western Areas compared to IGO’s assumptions at the time the initial scheme was announced in December 2021,” said IGO MD and CEO Peter Bradford.

“The revised scheme consideration shares value with Western Areas shareholders, while maintaining a very strong value proposition for IGO shareholders over the longer term. IGO looks forward to building Western Areas shareholder support for the transaction, while in parallel continuing the important integration workstreams that have already commenced, as we work toward transaction completion.”

The directors of Western Areas unanimously recommend that shareholders vote in favour of the revised scheme at the scheme meeting, in the absence of a superior proposal and subject to an independent expert concluding in the Independent Expert’s report.

“The Western Areas board is pleased to have negotiated an agreement with IGO considering the recent volatility in the nickel price and the positive impact this has had on Western Areas cashflow position and fundamental asset value since the Initial Scheme was announced on December 16. Forrestania is capturing the upside in near- and medium-term nickel prices, while Odysseus is positioned to capitalise on the longer-term nickel price driven by growth in electric vehicles,” said Western Areas chairperson Ian Macliver.

IGO told shareholders that Wyloo Consolidated had thrown its support behind the increased offer and would vote in favour of the agreement with its 9.8% interest in Western Areas.

IGO’s funding structure for the amended scheme remains unchanged, the company added. The revised scheme consideration implies a value of A$1.2-billion for Western Areas on a fully diluted basis, with transaction costs, inclusive of stamp duty, estimated to be A$91-million.

IGO will fund the amended scheme and costs through a combination of a new A$900-million senior-secured debt facility underwritten by ANZ, CBA and NAB, comprising a A$540-million amortising facility and A$360-million revolver, both with a maturity date of 30 April 2025, and the remaining balance from IGO’s existing cash reserves of A$570-million.

Upon completion of the amended scheme, IGO will assume Western Area’s existing cash reserves of A$143-million. IGO expects to fund the continued development of Cosmos through a combination of existing cash and operating cashflows.