We saw the mining equivalent of alchemy on Thursday in a deal revealed by IGO (ASX:IGO) and gold tiddler Medallion Metals (ASX:MM8).
IGO has a review of its future underway, and on Thursday it made its choice quite clear when it revealed a deal to sell its dying nickel assets at Forrestania in WA. This will create a prospective area for gold where nickel once reigned.
While selling the mines and associated infrastructure via a nine-month option with a prospective buyer, IGO is hedging its bets, retaining the rights to any nickel or lithium discovered through exploration around Forrestania.
The bottom line is that IGO is transforming dying nickel assets into a vibrant gold project, with hopes for more. After all, gold is the only booming metal right now.
IGO announced an agreement with Medallion Metals, a WA gold explorer with a market value of just over $16 million, to divest certain assets of its Forrestania nickel operation in Western Australia. There’s an upfront cash payment of $15 million, with a total payment capped at $50 million.
IGO will transition Forrestania into care and maintenance in 2024-25 after 18 years of commercial nickel production, as reserves are depleting. This path was announced in July, alongside a broader strategic review. Last month, the company revealed plans to slim down its executive team amid nickel writedowns and to maximize cash from its transitioning nickel businesses.
The assets include IGO’s Cosmic Boy Processing Plant and associated infrastructure, which Medallion will use to accelerate commercial production at its nearby flagship Ravensthorpe Gold project.
IGO Limited entered into an exclusivity deed with Medallion Metals granting Medallion a nine-month period (extendable by up to three months) to negotiate acquiring the Cosmic Boy processing facility and associated infrastructure at the Forrestania Nickel Project, following the completion of nickel processing.
During the exclusivity period, IGO and Medallion intend to conduct due diligence, progress discussions, and negotiate binding transaction documentation.
IGO and Medallion also plan to negotiate, on a non-exclusive basis, the grant of gold and silver rights to Medallion across the Forrestania tenement package (subject to existing third-party rights).
Medallion is attracted to the Cosmic Bay processing operation for its gold project and the potential for gold prospects in the area. Its Ravensthorpe Gold Project has mineral resources above a two-gram-per-tonne gold cut-off grade, totaling 5.6 million tonnes at 4.3 grams per tonne gold and 0.6% copper for a total of 770,000 ounces of gold and 36,000 tonnes of copper.
Medallion CEO, Paul Bennett, said, “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. Additionally, establishing gold processing capability at Forrestania creates an opportunity to commercialize stranded deposits in the region and reinvigorate gold exploration across the highly prospective Forrestania greenstone belt. We welcome the opportunity to partner with IGO to create a new gold business at Forrestania while allowing IGO to continue to pursue its corporate objectives in the region.”