IGO enters talks to offload Forrestania nickel mine to explorer Medallion Metals

IGO has revealed it is shopping around its troubled Forrestania nickel mine and may have already landed a buyer.

The Ivan Vella-led miner on Thursday told investors it had entered into exclusive talks with West Perth-based gold and copper explorer Medallion Metals to do a deal that would ensure it kept one foot on the region’s prospective lithium deposits.

The talks will run for nine months, with the possibility of a three-month extension, to negotiate a proposal to acquire Forrestania’s Cosmic Boy processing facility and other infrastructure.

“IGO and Medallion also intend to negotiate on a non-exclusive basis the grant of gold and silver rights to Medallion across the Forrestania tenement package,” the miner said.

IGO picked up Forrestania, south of Southern Cross, in 2022 as part of its ill-fated $1.3 billion takeover of Western Areas.

Its full value was later written off entirely and last month IGO announced the mine would be placed on care and maintenance, adding to a string of nickel assets across WA that had fallen to a depressed market for the key battery metal.

IGO has also placed the once-hyped Cosmos nickel mine near Leinster into care and maintenance to wait out a global price recovery hamstrung by a glut of cheap supply from Indonesia..

It is also facing falling output from its flagship Nova nickel-copper operation in the Fraser Range and last month issued lower full-year 2025 production guidance of between 16,000 tonnes and 18,000t, down from 21,000t to 22,000t in 2023-24.

BHP revealed last month it would shutter all its WA nickel asset, with the loss of thousands of job, after earlier effectively wiping out the value of the portfolio.

IGO’s Forrestania’s Flying Fox and Spotted Quoll mines have been in commercial nickel production for almost two decades but are nearing the end of their reserves. Nickel sales from the mine last financial year were 7230 tonnes, delivering revenue of just $234.8 million.

“The opportunity to divest the valuable assets at Forrestania to another party, such as Medallion, would be a positive outcome for both IGO and Medallion,” IGO saiud.

“Importantly, IGO will retain lithium and nickel rights at Forrestania.”

IGO’s shares were down almost 3 per cent to $5.07 at 9.30am.

The miner may be looking to divest one nickel asset, but Mr Vella told the Diggers & Dealers Mining Forum in Kalgoorlie Boulder this week that it would not give up on the unfinished Comsos development.

“We know there’s a resource there,” he said.

“What we need to do is understand it better and study, we’re doing a study ... from a clean sheet building upwards, and try and understand how low we could get costs to extract that resource, and if we can get that into the right territory, then we can bring that back online.

“So it’s a fantastic option to work through, but I’m just going to let the team work through step by step, and not get too over excited too early.”

But Mr Vella said IGO was directing more of its shrunken exploration budget towards lithium and copper.

“We know the demand growth for lithium is significant. So we can find, maybe it won’t be Greenbushes, but if we can find another resource that’s obviously very exciting,“ he said.

“And copper, everyone’s talking about (it). It’s super, super important in the world the energy transition and if we can find some more, I think that will be very welcome.”