IGO sells Tropicana for A$903m

13th April 2021 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

IGO sells Tropicana for A$903m

PERTH (miningweekly.com) – Gold miner Regis Resources on Tuesday announced plans to raise A$650-million capital to partly fund the A$903-million buy of ASX-listed Independence Group’s (IGO’s) 30% interest in the Tropicana gold project, in Western Australia.

Regis and IGO have inked a conditional binding agreement under which Regis would acquire IGO’s share in the Tropicana project for A$903-million cash, subject to completion adjustments.

Regis MD and CEO Jim Beyer told shareholders that the acquisition of an interest in Tropicana would create substantial value and provide the company with multiple additional opportunities to deliver growth for shareholders over the short, medium and long term.

The project is a top five Australian producing gold mine, having produced 463 000 oz in 2020, and is expected to deliver between 380 000 oz and 430 000 oz in production in 2021.

“This is a genuinely transformational transaction for Regis and one that delivers on our strategic objectives to grow as a safe, responsible, reliable, long life, low cost gold producer, generating strong financial returns. Diversifying the company’s robust portfolio through the acquisition of a 30% interest in the Tropicana operation will deliver significant improvement in the company’s resource, reserves and annual production, along with providing additional immediate cashflows, all of which adds to the strength of our platform for undertaking further organic and inorganic growth initiatives,” said Beyer.

IGO told shareholders that the execution of the binding sales agreement marked the completion of the strategic review for the Tropicana project, which was announced in September last year.

As part of the strategic review, IGO considered a number of options to realise the full value of its interest in the Tropicana project, including a global sales process which resulted in strong interest, and was concluded with the decision to sell its interest in the project to Regis.

“This transaction, along with the recent investment in Tianqi Lithium assets in Australia, solidifies IGO’s position of becoming a globally relevant pure-play battery minerals producer and developer, uniquely exposed to tier 1 nickel, copper, cobalt and lithium,” said IGO CEO and MD Peter Bradford.

“We are extremely pleased with the outcome of the transaction and the assistance of the AngloGold Ashanti teams throughout the sales process.”

Bradford said that proceeds from the sale would be applied to funding IGO’s investment into Tianqi Lithium, enabling the company to retain a strong balance sheet post the completion of the transaction.

The completion of the transaction between Regis and IGO would be subject to the waiver or non-exercise of AngloGold Ashanti’s 60-day right of refusal, during which time AngloGold Ashanti has the option to purchase IGO’s interest in the Tropicana project at the same price and on the same terms as the Regis transaction.

To partly fund the A$903-million cash cost of the transaction, Regis on Tuesday announced that it would undertake a A$650-million capital raise, consisting of a near 74-million institutional placement, to raise an initial A$200-million, and a 1-for-3.08 accelerated pro rata non-renounceable entitlement offer of a further 167-million shares, to raise a further A$450-million.

All of the new shares offered would be priced at A$2.70 a share, representing a 14.8% discount to Regis’ last closing price on April 12, and a 10.6% discount to the company’s theoretical ex-rights price.

The institutional component of the entitlement will open on April 13, while the retail component will open on April 20.

In addition to the capital raising, Regis has also secured a new A$300-million secured syndicated term loan facility with a maturity date of three years from completion. The company has entered into a credit approved term sheet with the Bank of America to provide the secured term loan facility.