Doesn't seem a great deal to me for IGO. The rumour first surfaced with SIR at roughly $2.80. If so based on IGO's SP before today - that is a 48% premium. I don't really see the synergies as being significant or unarguable, beyond having the manpower and tools that could be moved around, and the experience marketing Ni. The Ni deposit at Nova is very different to the Long deposit and mining it will be quite different. Many of the potential problems that are yet to be faced will require overseas brainpower rather than local to resolve. There also are often commissioning problems with a new mine and processing plant, especially with a deposit type that is unique in Australia (I believe). It could have been a 50 50 chance that there would be problems, and SIR holders may not have been as attracted to their shares in the face of that.
Also it looks like the Nova tenements are somewhat contiguous with the Tropicana tenements - but that is a gold mine and only 30% owned, and not really the same type of mining even if there was some ability to share manpower or brains.
I think IGO management have got carried away. You can look at Ni as either being in the bargain basement, or in a bear market. Seems to be (allowing for a 30% premium) a roughly $168m transfer of wealth from IGO to SIR, and further the market will be concerned IGO will carry out more mergers with a massive premium. I think that IGO management have shown a lack of patience and prudence. I smart operator would have started stalking SIR, and have waited for buying opportunities during the commissioning phase IMO.
However - I don't judge myself as having the ability to value a resources based operation - so maybe I am stepping over the line.
SIR Price at posting:
$3.93 Sentiment: None Disclosure: Not Held
EVN Price at posting:
$1.18 Sentiment: None Disclosure: Not Held
IGO Price at posting:
$5.17 Sentiment: Sell Disclosure: Held
