Medallion’s Forrestania Buy: Can It Overcome Financing and Regulatory Hurdles?
Medallion Metals has executed a binding agreement to acquire the Forrestania Nickel Operation from IGO Limited, setting the stage for a low-capital pathway to gold and copper production at its Ravensthorpe project. The transaction targets completion and a final investment decision by late 2025.
- Binding Asset Sale Agreement executed with IGO for Forrestania acquisition
- No upfront cash; 1.5% Net Smelter Return royalty granted to IGO on future gold
- Transaction supports Ravensthorpe Gold Project development with Forrestania processing
- Scoping study indicates ~70,000 oz gold equivalent annual production and strong cashflows
- Completion subject to feasibility, financing, regulatory approvals, and board sign-off
Strategic Acquisition Unlocks Processing Infrastructure
Medallion Metals Limited has reached a significant milestone by signing a binding Asset Sale Agreement with IGO Limited to acquire 100% of the Forrestania Nickel Operation (FNO). This acquisition includes all tenements, the Cosmic Boy processing plant, equipment, infrastructure, inventories, and related mineral rights, excluding reserved nickel and lithium rights retained by IGO. Notably, the deal involves no upfront or deferred cash payments; instead, Medallion will grant IGO a 1.5% Net Smelter Return royalty on all future gold production from the acquired tenements.
Advancing Ravensthorpe Gold Project with Established Assets
The Forrestania acquisition is a cornerstone in Medallion’s strategy to develop its Ravensthorpe Gold Project (RGP) by leveraging the existing processing capabilities at Forrestania. The company aims to make a Final Investment Decision (FID) and complete the transaction by late 2025. This integration promises a rapid, low capital intensity route to production, with a recent scoping study forecasting an annual gold equivalent production of approximately 70,000 ounces, supported by robust financial metrics including a pre-tax net present value of $329 million and an internal rate of return of 129% under base case assumptions.
Robust Economics and Growth Potential
The scoping study highlights a 5.5-year mine life with average annual pre-tax cash flows of $90 million, driven by an initial production inventory grading 3.9 grams per tonne gold and 0.6% copper. The project’s all-in sustaining costs are estimated at A$1,845 per ounce of gold produced, net of by-product credits. Medallion also identifies multiple upside opportunities, including resource extensions from a recently completed 17,000-metre drill program and potential to commercialize additional gold deposits within trucking distance of the Cosmic Boy plant.
Conditions Precedent and Regulatory Pathway
Completion of the transaction hinges on several conditions precedent, including the execution of ancillary agreements, completion and announcement of a feasibility study, securing binding financing arrangements, and obtaining all necessary regulatory consents under Western Australian and Commonwealth environmental legislation. Medallion is actively progressing these work streams alongside ongoing discussions with potential offtake and finance partners. The company is also preparing to expand its senior management team to manage the integration and development phases.
Looking Ahead
With approximately $29 million in cash reserves, Medallion is well positioned to advance toward production. The combination of Ravensthorpe’s high-grade gold-copper resources and Forrestania’s established infrastructure offers a compelling investment case in Western Australia’s southern Goldfields. Investors will be watching closely as the company moves toward its FID and transaction completion, which could unlock substantial value and position Medallion as a new gold and copper producer in the region.
Bottom Line?
Medallion’s Forrestania acquisition sets a promising stage, but execution risks remain as it pushes toward late 2025 production.
Questions in the middle?
- Will Medallion secure the necessary financing and offtake agreements to meet its late 2025 FID target?
- How will the 1.5% royalty to IGO impact Medallion’s long-term cash flow and project economics?
- What are the prospects for extending mine life and increasing throughput beyond the current scoping study assumptions?
