UPDATE 2-Australia's IGO to exit gold operations to focus on lithium, nickel

  • Reuters
  • Stock Market News
UPDATE 2-Australia's IGO to exit gold operations to focus on lithium, nickel
Credit: © Reuters.

* IGO to sell 30% stake in Tropicana mine to Regis for $688 mln

* Miner to use proceeds to fund Tianqi lithium assets purchase

* IGO shares climb nearly 5% on news, Regis on trading halt

(Adds share movement, analyst comments)

By Shruti Sonal

April 13 (Reuters) - Australia's IGO Ltd IGO.AX is exiting gold operations by selling its 30% stake in Tropicana mine to Regis Resources Ltd RRL.AX for A$903 million ($688.27 million) as it seeks to focus on its nickel and lithium ventures.

The announcement on Tuesday comes following a lengthy review of the project that started last September after the nickel-gold miner received unsolicited approaches from a number of parties. sale provides IGO with a "compelling exit story" and the company is positioning itself as a pure-play battery material company post-divestment, RBC analysts said.

Proceeds from the stake sale will be used to fund IGO's investment in the Australian lithium assets of Tianqi Lithium Corp 002466.SZ announced in December. IGO continues to believe that Tropicana is a high-quality tier-1 gold asset with strong upside potential, it is no longer aligned with our focus on commodities critical to clean energy," IGO Chief Executive Officer Peter Bradford said.

Shares of IGO climbed as much as 4.7% to A$6.97, their highest in more than a month, on the news. Regis shares were on a trading halt.

Global gold miner AngloGold Ashanti ANGJ.J , whose local unit holds the remaining 70% stake in Tropicana, has the right to pre-empt the stake sale.

If AngloGold exercises its pre-emption rights, the deal will not proceed and IGO will instead sell the stake to AngloGold on the same terms as the agreement with Regis.

Regis plans to raise up to A$650 million in equities to fund the acquisition, it said in a separate statement.

While the deal will improve the production profile of Regis, it appears to be paying a premium for the stake, RBC analysts said.

($1 = 1.3120 Australian dollars)

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