Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Andrew Forrest's Wyloo Consolidated, with 9.8% of shares out, will now support the <strong><a href="https://www.smartkarma.com/entities/igo-ltd" target="_blank" data-smartkarma-citation="entities:462:1" rel="noopener">IGO Ltd (IGO AU)</a></strong> / <strong><a href="https://www.smartkarma.com/entities/western-areas-ltd" target="_blank" data-smartkarma-citation="entities:15497:1" rel="noopener">Western Areas (WSA AU)</a></strong>, just three weeks after paying through terms. </li>
<li>That pledge pivots off a newly-inked side agreement between IGO and Wyloo to jointly evaluate opportunities for nickel downstream processing in Australia.</li>
<li>This removes the immediate prospect of a competing Offer from Wyloo, and in turn, IGO's need to bump terms. Yet <strong><a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a></strong> still waits in the wings.</li>
</ul>


Andrew Forrest's Wyloo Consolidated, with 9.8% of shares out, will now support the IGO Ltd (IGO AU) / Western Areas (WSA AU), just three weeks after paying through terms. 
That pledge pivots off a newly-inked side agreement between IGO and Wyloo to jointly evaluate opportunities for nickel downstream processing in Australia.
This removes the immediate prospect of a competing Offer from Wyloo, and in turn, IGO's need to bump terms. Yet BHP Group (BHP AU) still waits in the wings.


Investors Caught Out As Twiggy Backs IGO's Offer For Western Areas

<ul>
<li>After <strong><a href="https://www.smartkarma.com/entities/igo-ltd" target="_blank" data-smartkarma-citation="entities:462:1" rel="noopener">IGO Ltd (IGO AU)</a></strong> switched to an all-cash bid last week and entered into a Scheme Implementation Deed, <strong><a href="https://www.smartkarma.com/entities/western-areas-ltd" target="_blank" data-smartkarma-citation="entities:15497:1" rel="noopener">Western Areas (WSA AU)</a></strong> has consistently traded through terms.</li>
<li>The key question is whether <strong><a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a></strong> will make a competing Offer. </li>
<li>BHP recently lost out to Andrew Forrest’s Wyloo Metals in the competitive bidding situation for <strong><a href="https://www.smartkarma.com/entities/noront-resources-ltd" target="_blank" data-smartkarma-citation="entities:33397:1" rel="noopener">Noront Resources Ltd (NOSOF US)</a></strong>, which boasts similar nickel mining reserves to Western Areas. </li>
</ul>


After IGO Ltd (IGO AU) switched to an all-cash bid last week and entered into a Scheme Implementation Deed, Western Areas (WSA AU) has consistently traded through terms.
The key question is whether BHP Group (BHP AU) will make a competing Offer. 
BHP recently lost out to Andrew Forrest’s Wyloo Metals in the competitive bidding situation for Noront Resources Ltd (NOSOF US), which boasts similar nickel mining reserves to Western Areas. 


Western Areas/IGO: Will BHP Crash The Party?

<p>At long last - a summary of M&amp;A spreads (on deals discussed on Smartkarma) across Asia-Pacific.</p>
<p>I number 32, mostly firm, deals around the region.</p>
<p>This insight provides a quick summary of gross/annualised (where possible) spreads as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks</p>
<p>More below the fold.</p>

At long last - a summary of M&amp;A spreads (on deals discussed on Smartkarma) across Asia-Pacific.
I number 32, mostly firm, deals around the region.
This insight provides a quick summary of gross/annualised (where possible) spreads as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks
More below the fold.

Asia-Pac Weekly Risk Arb Summary: Sydney Aiport, Beijing Capital Land, IGO/Western Areas

<p>After a downturn in the price of the battery commodities and a reduction in tonnes exported, mining consolidations are back in vogue as miners take big bets on electric vehicles, as demand and prices increase for battery minerals.</p>
<ul style="list-style-type: circle;">
<li>February last year, <a href="https://www.smartkarma.com/entities/wesfarmers-ltd" target="_blank" data-smartkarma-citation="entities:1104:1" rel="noopener">Wesfarmers Ltd (WES AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02342610-6A1020764?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">said</a> it would proceed with the development of a new lithium mine and processing hub in WA. The Mt Holland lithium project is a JV with <a href="https://www.smartkarma.com/entities/soc-quimica-y-minera-chile-b" target="_blank" data-smartkarma-citation="entities:24555:1" rel="noopener">Soc Quimica Y Minera Chile-B (SQM/B CI)</a>. Wesfarmers expects to lay out ~$950mn developing the mine, concentrator, and refinery (in Kwinana). A final investment decision was <a href="https://www.wesfarmers.com.au/util/news-media/article/2021/04/15/green-light-for-lithium-project" target="_blank" rel="noopener">announced</a> in February <em>this</em> year. </li>
<li>In <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02320079-6A1011583?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">December</a> last year, <a href="https://www.smartkarma.com/entities/igo-ltd" target="_blank" data-smartkarma-citation="entities:462:1" rel="noopener">IGO Ltd (IGO AU)</a> formed a JV with China’s <a href="https://www.smartkarma.com/entities/sichuan-tianqi-lithium-industries-inc" target="_blank" data-smartkarma-citation="entities:5698:1" rel="noopener">Tianqi Lithium Corporation  (002466 CH)</a>, paying $US1.4bn to acquire a 24.99% stake in the Greenbushes lithium mine in Western Australia. The mine produces ~2% of the world's spodumene concentrate from a hard rock lithium mine. The JV also includes a 49% stake in the downstream lithium hydroxide plant in Kwinana near Perth. The JV was formed after Tianqi faced an increasing debt obligation after the decline in lithium prices. Tianqi maintained a 26% stake in Greenbushes and a 51% stake in the hydroxide plant.
<ul style="list-style-type: circle;">
<li>This was a large bet, transforming IGO into a battery mineral and renewable energy play, away from its copper and gold heritage.  The deal was funded by debt and an A$766mn equity raise including a $446mn fully underwritten placement at $4.60, and a $320mn 1-for-8.5 pro-rata entitlement offer. The offer price represented a 9.7% discount to IGO’s last traded price.</li>
<li>The transaction was completed on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02390039-6A1038822?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">30 June</a>. Around two months earlier, IGO <a href="https://www.australianmining.com.au/news/igo-sells-tropicana-stake-for-903m/" target="_blank" rel="noopener">sold</a> its 30% stake in the Tropicana gold mine joint venture for A$903mn.</li>
<li>Separately, IGO withdrew its takeover offer to <a href="https://www.smartkarma.com/entities/panoramic-resources-ltd" target="_blank" data-smartkarma-citation="entities:15960:1" rel="noopener">Panoramic Resources (PAN AU)</a> in <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02190245-6A961368?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">January</a> last year, citing a breach of conditions.</li>
</ul>
</li>
<li>
<a href="https://www.smartkarma.com/entities/pilbara-minerals-ltd" target="_blank" data-smartkarma-citation="entities:7460:1" rel="noopener">Pilbara Minerals (PLS AU)</a> acquired <a href="https://www.smartkarma.com/entities/altura-mining-ltd" target="_blank" data-smartkarma-citation="entities:13385:1" rel="noopener">Altura Mining (AJM AU)</a> late last year after the latter entered receivership in November.</li>
<li>
<div>
<p>After circling each other for a couple of years, <a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> and <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> entered into a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02364542-2A1293132?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">binding agreement</a> on the 19 April 2021, under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy. The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets. This deal was discussed in <em><a href="https://skr.ma/W2guR" target="_blank" rel="noopener">Orocobre/Galaxy Resources: On A Charge</a>.</em></p>
</div>
</li>
</ul>
<p>Nickel miner <a href="https://www.smartkarma.com/entities/western-areas-ltd" target="_blank" data-smartkarma-citation="entities:15497:1" rel="noopener">Western Areas (WSA AU)</a> has now <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02408950-6A1046238?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">confirmed</a> media reports it is in preliminary discussions with IGO in relation to a change of control proposal. </p>
<p>No price is mentioned, and due diligence has yet to be afforded.</p>
<p>More below the fold. </p>

After a downturn in the price of the battery commodities and a reduction in tonnes exported, mining consolidations are back in vogue as miners take big bets on electric vehicles, as demand and prices increase for battery minerals.

February last year, Wesfarmers Ltd (WES AU) said it would proceed with the development of a new lithium mine and processing hub in WA. The Mt Holland lithium project is a JV with Soc Quimica Y Minera Chile-B (SQM/B CI). Wesfarmers expects to lay out ~$950mn developing the mine, concentrator, and refinery (in Kwinana). A final investment decision was announced in February this year. 
In December last year, IGO Ltd (IGO AU) formed a JV with China’s Tianqi Lithium Corporation  (002466 CH), paying $US1.4bn to acquire a 24.99% stake in the Greenbushes lithium mine in Western Australia. The mine produces ~2% of the world's spodumene concentrate from a hard rock lithium mine. The JV also includes a 49% stake in the downstream lithium hydroxide plant in Kwinana near Perth. The JV was formed after Tianqi faced an increasing debt obligation after the decline in lithium prices. Tianqi maintained a 26% stake in Greenbushes and a 51% stake in the hydroxide plant.

This was a large bet, transforming IGO into a battery mineral and renewable energy play, away from its copper and gold heritage.  The deal was funded by debt and an A$766mn equity raise including a $446mn fully underwritten placement at $4.60, and a $320mn 1-for-8.5 pro-rata entitlement offer. The offer price represented a 9.7% discount to IGO’s last traded price.
The transaction was completed on the 30 June. Around two months earlier, IGO sold its 30% stake in the Tropicana gold mine joint venture for A$903mn.
Separately, IGO withdrew its takeover offer to Panoramic Resources (PAN AU) in January last year, citing a breach of conditions.



Pilbara Minerals (PLS AU) acquired Altura Mining (AJM AU) late last year after the latter entered receivership in November.


After circling each other for a couple of years, Galaxy Resources (GXY AU) and Orocobre Ltd (ORE AU) entered into a binding agreement on the 19 April 2021, under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy. The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets. This deal was discussed in Orocobre/Galaxy Resources: On A Charge.



Nickel miner Western Areas (WSA AU) has now confirmed media reports it is in preliminary discussions with IGO in relation to a change of control proposal. 
No price is mentioned, and due diligence has yet to be afforded.
More below the fold. 

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<div><p>S&amp;P Dow Jones Indices will announce changes to the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.</p></div><div>We are almost three quarters of the way through the review period. There are 3 potential inclusions at the review - <a href="https://www.smartkarma.com/entities/centuria-capital-group" target="_blank" data-smartkarma-citation="entities:15546:1" rel="noopener">Centuria Capital (CNI AU)</a>, <a href="https://www.smartkarma.com/entities/pinnacle-investment-manageme" target="_blank" data-smartkarma-citation="entities:20624:1" rel="noopener">Wilson (PNI AU)</a> and <a href="https://www.smartkarma.com/entities/sealink-travel-group-ltd" target="_blank" data-smartkarma-citation="entities:6400:1" rel="noopener">Sealink Travel (SLK AU)</a> while the potential deletions are <a href="https://www.smartkarma.com/entities/nuix-limited" target="_blank" data-smartkarma-citation="entities:31040:1" rel="noopener">Nuix Limited (NXL AU)</a>, <a href="https://www.smartkarma.com/entities/nrw-holdings-ltd" target="_blank" data-smartkarma-citation="entities:9271:1" rel="noopener">NRW Holdings (NWH AU)</a> and <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a>.</div><div></div><div>
<a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> is placed in the inclusion zone but is unlikely to be added to the index given its pending merger with <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a>.</div><div></div><div>
<a href="https://www.smartkarma.com/entities/de-grey-mining-ltd" target="_blank" data-smartkarma-citation="entities:6192:1" rel="noopener">De Grey Mining (DEG AU)</a> is a close add and the corresponding deletion is <a href="https://www.smartkarma.com/entities/westgold-resources-ltd" target="_blank" data-smartkarma-citation="entities:24269:1" rel="noopener">Westgold Resources (WGX AU)</a>.</div><div></div><div>There is a large impact expected on the inclusions while the impact on the deletions is lower.</div><div></div><div>For <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a>, the short interest is close to the estimated passive selling. For the other two deletes, short interest is a lot smaller than the estimated passive selling and there will be more shorts created from now to rebalance implementation day.</div>

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.We are almost three quarters of the way through the review period. There are 3 potential inclusions at the review - Centuria Capital (CNI AU), Wilson (PNI AU) and Sealink Travel (SLK AU) while the potential deletions are Nuix Limited (NXL AU), NRW Holdings (NWH AU) and G8 Education (GEM AU).
Galaxy Resources (GXY AU) is placed in the inclusion zone but is unlikely to be added to the index given its pending merger with Orocobre Ltd (ORE AU).
De Grey Mining (DEG AU) is a close add and the corresponding deletion is Westgold Resources (WGX AU).There is a large impact expected on the inclusions while the impact on the deletions is lower.For G8 Education (GEM AU), the short interest is close to the estimated passive selling. For the other two deletes, short interest is a lot smaller than the estimated passive selling and there will be more shorts created from now to rebalance implementation day.

ASX200 Sep21 Index Rebalance Preview: Large Impact Names

Australia

Western Areas Ltd is an Australian-based nickel sulphide producer which owns the Forrestania Nickel Project, along with development projects in Canada and Finland.  The Company has two producing nickel mines, Flying Fox and Spotted Quoll.

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Western Areas (WSA AU)

Investors Caught Out As Twiggy Backs IGO's Offer For Western Areas

Trading tight at a gross/annualised return of 0.9%/4.7% assuming late April completion. Pricing for WSA appears full. But I would not rule out BHP...

David Blennerhassett

Western Areas/IGO: Will BHP Crash The Party?

I'd look to enter around here, or closer to terms. Taking Western Ars under the fold makes a lot of sense towards the self-sufficiency of BHP's...

David Blennerhassett

Asia-Pac Weekly Risk Arb Summary: Sydney Aiport, Beijing Capital Land, IGO/Western Areas

This insight provides a quick summary of gross/annualised spreads as at the last trading day, and how those spreads have changed over the last...

David Blennerhassett

IGO/Western Areas: Battery Mineral Grab

Western Areas has generally underperformed peers over the past year. It is clearly in place. and if not from IGO, there's no reason another suitor...

David Blennerhassett

ASX200 Sep21 Index Rebalance Preview: Large Impact Names

We see 3 potential changes to the ASX200 at the Sep rebalance with CNI, PNI and SLK being included and NXL, NRW and GEM being deleted. Passive...

Brian Freitas

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