Diversified miner IGO Ltd is considering selling its 30 per cent stake in the huge Tropicana gold mine in Western Australia, saying it is not getting enough value from the asset despite high prices for the precious metal.
The company, which also produces nickel, copper and cobalt from its wholly owned Nova mine in WA, announced on Friday it was conducting a strategic review of Tropicana, a project 70 per cent owned by South African giant AngloGold Ashanti.
IGO, formerly named Independence Group, said it had received unsolicited approaches from a number of parties and would assess the asset over the next three to six months.
The mine produced 463,118 ounces of gold last financial year and has an estimated life of seven years but could be extended through exploration success.
“The strategic review will involve a detailed technical analysis of the various opportunities to enhance value through underground development and exploration as well as the value which may be realised through full or partial sale or other alternative transaction structures,” IGO said.
Chief executive Peter Bradford said Tropicana was clearly a high-quality and significant asset within the company’s portfolio, but its focus was on commodities critical to clean energy.
IGO, which delivered a record 2019-20 profit, is developing processing technology that converts nickel sulphide concentrate into nickel sulfate, a key raw material for the electric vehicle battery market.
“In the current gold price environment, we do not believe that IGO’s share price fully reflects the value of Tropicana,” Mr Bradford said.
“As such, in parallel to an assessment of future underground opportunities at Tropicana, IGO has commenced a review of its investment in Tropicana and how best to realise the asset’s full value to the benefit of IGO’s shareholders.”
Shares in the company rose more than 4 per cent in morning trade.
Originally published as Nickel miner considers selling huge gold asset