Image: IGO.
BY REUBEN ADAMS
INDEPENDENCE Group (IGO) has confirmed an evolving focus on assets “aligned to the emerging super-cycle for energy storage minerals” after announcing the sale of its Jaguar zinc-copper operation in WA to CopperChem for just $73.2m.
In June last year CopperChem, a subsidiary of diversified investment house Washington H. Soul Pattinson and Company, also acquired IGO’s Stockman copper-zinc project in north east Victoria for $47.5m. IGO acquired both the Jaguar/Bentley and Stockman assets in a $531m takeover of Jabiru Metals in 2011.
$25 million will be paid on completion of the Jaguar transaction – scheduled for 31 May — and an additional $48.2 million in deferred cash payments.
The transition of ownership will be rapid, with the handover to be completed by the start of June following completion of the transaction in late May. IGO will provide “agree corporate services” for a further 3 months including payroll, accounting, HR, It and concentrate logistics to CopperChem on a cost-plus basis.
IGO chief Peter Bradford said that although the company recognised opportunity for future discovery at Jaguar, it was not consistent with its future strategy.
“Following a review of the value enhancement opportunities at Jaguar, we have decided that the asset does not fit our strategic metrics and accordingly we have made the decision to divest the asset through the sale to CopperChem,” he said.
“This enables IGO to concentrate on delivery from, and growth of, our key assets, Nova and Tropicana, and the execution of our exploration strategy.
“The Jaguar Operation has played a significant role in the growth of IGO to-date and, on behalf of the company, I would like to recognise the achievements of the team including their commitment to safe and consistent production and outstanding local community engagement.
“The efforts of our people, both employees and contractors, is greatly appreciated.”
IGO maintained that it was not expected to make a loss on the $73.2m transaction, despite Jaguar’s value seemingly recorded at $185.61m, minus $32m in liabilities, in its December half year financial statements.
“I’d have to go back and look at those numbers, but there’s definitely been some depreciation and amortisation, [and] the value at 31 May will be closer to the order of $70m,”IGO chief financial officer Scott Steinkrug said during a 28 May conference call.
“We take a look at the carrying value of Jaguar at the point of sale, being 31 May, and then we compare that with the value which won’t be too far off that $73.5 million.
“What we end up with is effectively neutral, or minimal, movement in terms of the profit or loss on the sale.”
