IGO has struck an agreement deed with Medallion Metals for the possible divestment of assets at its Forrestania project, another step in a major restructuring of its struggling nickel business.
IGO has struck an agreement deed with Medallion Metals for the possible divestment of assets at its Forrestania project, another step in a major restructuring of its struggling nickel business.
Under the proposed transaction, Medallion would acquire the Cosmic Boy processing facility and other relevant infrastructure at Forrestania, once IGO has completed all nickel processing at the site.
The exclusivity period between both parties is for nine months, with an option to extend up to a further three months.
IGO, which has a market cap of $3.95 billion, told the market both parties were intending to negotiate an understanding, on a non-exclusive basis, that Medallion would be granted gold and silver rights across Forrestania – whereas Ivan Vella-led IGO would retain lithium and nickel rights.
Medallion managing director Paul Bennett said the proposed transaction could provide a “transformational opportunity” for the junior.
“Bringing the established high-grade gold-copper resources at Ravensthorpe together with the Forrestania infrastructure has the potential to unlock significant value in a short space of time,” he said.
“Additionally, establishing gold processing capability at Forrestania creates an opportunity to commercialise stranded deposits in the region as well as reinvigorate gold exploration across the highly prospective Forrestania greenstone belt.
“We welcome the opportunity to partner with IGO to seek to create a new gold business at Forrestania while allowing IGO to continue to pursue its corporate objectives in the region.”
Medallion will pay a $1 million cash exclusivity fee, which is due within five days of the exclusivity agreement being signed.
Last month, IGO told the market it would be transitioning Forrestania into care and maintenance before the end of the 2024 calendar year, with its nickel reserves coming to the end of their life.
This, coupled with its Cosmos nickel project also being placed into care and maintenance, resulted in IGO flagging job cuts from both its corporate and exploration teams.
Speaking at Diggers and Dealers on Monday, Mr Vella wouldn’t be drawn on revealing the exact number of redundancies, in order to respect those impacted by the decision.
During its June 2024 quarterly report, IGO said Forrestania’s nickel production was down 36 per cent, from 1,944,000 to 1,252,000 tonnes. Its overall production for the 2024 financial year, 7,571,000 tonnes, fell in the lower range of the operation's annual production guidance of 7,500,000 to 9,000,000 tonnes.
Despite a rise in its nickel sales, overall sales revenue from the site was down.
As of 12.52pm WST, IGO shares were down 2 per cent to $5.10.
