13/04/2021 - 11:00

IGO confirms Tropicana sale

13/04/2021 - 11:00

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IGO has agreed to sell its 30 per cent stake in the Tropicana goldmine to Regis Resources, which is paying $903 million in cash for the WA asset.

IGO confirms Tropicana sale
AngloGold owns 70 per cent of the Tropicana goldmine. Photo: AngloGold Ashanti

IGO has agreed to sell its 30 per cent stake in the Tropicana goldmine in Western Australia to Regis Resources, which is paying $903 million in cash for the asset.

The announcement comes one day after Gold Road Resources said its proposal for the 30 per cent stake had not been accepted, following speculation it had offered to pay $1 billion.

Today, Regis said it would fund the Tropicana acquisition through both a $650 million equity raising (comprising an institutional placement and rights issue) and a new $300 million loan facility.

Meanwhile, AngloGold Ashanti, which owns the remaining 70 per cent Tropicana interest, has 60 days under pre-emptive rights to match the offer.

IGO has considered selling its stake in Tropicana since September last year, when it completed a strategic review of the asset.

The company’s flagship operation is the Nova nickel-copper-cobalt mine in WA’s Fraser Range.

Today, managing director Peter Bradford said the Tropicana sale would allow IGO to focus on commodities critical to clean energy.

He said the deal, along with the company's recent purchase of a minority stake in Tianqi Lithium's Australian assets (the Greenbushes lithium mine and Kwinana refinery in WA), solidified IGO's position of becoming a globally relevant minerals producer and developer.

"Since discovery in 2005, Tropicana has been an important part of IGO's history and a key driver of our sustained growth," Mr Bradford said.

"While IGO continues to believe that Tropicana is a high-quality, tier-one gold asset with strong upside potential, it is no longer aligned with our focus on commodities critical to clean energy.

"We are therefore delighted to have entered into an agreement to sell Tropicana to Regis."

Regis managing director Jim Beyer said the deal was a genuinely transformational transaction that would significantly improve the company's resources, reserves, annual production, and cash flows.

Regis owns the Duketon and McPhillamys gold projects in WA and NSW, respectively.

It has entered into a trading halt, which is expected to lift on Thursday when the company announces further details of its proposed capital raising.

King & Wood Mallesons is acting as legal adviser to Regis and Bank of America as financial adviser.

Meanwhile, IGO was trading 2.3 per cent higher at 12:52pm AEST to $6.81 per share.

The company is being advised by Herbert Smith Freehills and Macquarie Capital.

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