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Nickel and lithium miner IGO said the $799.7m (A$1.10bn) acquisition of Australia’s Western Areas will be delayed due to significant volatility in nickel prices.
The delay comes due to the temporary suspension of nickel trading on the London Metals Exchange (LME) on 8 March 2022 after prices surged to more than $100,000 per tonne.
The price surge follows the economic sanctions against Russia by the Western countries following Moscow’s military invasion of Ukraine.
Potential implications of the volatility in prices in the medium to long term are now being weighed by Western Areas and the independent expert appointed by it, KPMG Financial Advisory Services (Australia).
IGO, as a result, said it expects a ‘relatively short delay’ in completing the transaction with Western Areas.
Under the scheme of arrangement signed in December 2021, Western Areas shareholders will receive cash consideration of $2.44m (A$3.36) from IGO for each share held.
IGO and Western Areas now anticipate the deal to complete either in May or June 2022, a delay from the previous schedule of April 2022.
The firm will not increase its current cash offer for Western Areas.
In a press statement, IGO said: “IGO has no obligation, nor any current intention to increase the consideration in response to these short-term events (although it reserves its right to do so).
“As always, IGO remains disciplined in its approach to growing the business via mergers and acquisitions.”
Macquarie Capital (Australia) is serving as financial adviser for IGO, with Herbert Smith Freehills as legal adviser.