Independence Group Acquiring Sirius and its Nova Nickel Project

Drilling results from the Nova nickel project. Capital cost to develop the project is estimated at
A$443 million to facilitate production of copper, cobalt and nickel in concentrates.
(Photo: Sirius Resources)
Western Australia mining companies Independence Group and Sirius Resources announced on May 25 that Independence Group is acquiring Sirius in a cash and shares transaction that values Sirius at about A$1.8 billion. Independence Group holds a 30% interest in the Tropicana gold mine, where AngloGold Ashanti is 70% owner and operator, and 100% interests in the Long nickel and Jaguar copper-zinc mines in Western Australia. Sirius’ prime asset is its Nova nickel project, where mine construction began in January (E&MJ, March 2015, p. 16).

At full production, the Nova mine is expected to produce an average of 26,000 metric tons per year (mt/y) of nickel and 850 mt/y of cobalt in a nickel concentrate and 11,500 mt/y of copper in a separate copper concentrate. First concentrate production is planned for the fourth quarter of 2016. Mill throughput at design capacity will be 1.5 million mt/y. Initial mine life is planned at 10 years. Capital cost to develop the project is estimated at A$443 million.

The agreement also provides for the spinout of Sirius’ Western Australia and Scandinavian exploration projects into a new company to be called S2 Resources.

Independence Group Managing Director Peter Bradford said, “This transaction creates a leading diversified Australian mining company with an outstanding and rapidly growing production profile, a strong balance sheet, and excellent current and future cash flows. It provides an outstanding outcome for all parties.

“The acquisition of Sirius continues our stated strategy of building a diversified mining company with a balanced portfolio of exploration, development, and producing assets, focusing on high margins and long project lives. The proximity of the Sirius and Independence Group assets in Western Australia creates opportunities to realize synergies and cost efficiencies across a dominant land-holding position. This transaction is significantly NAV accretive for Independence shareholders.”

As featured in Womp 2015 Vol 07 -