A worker poses with a handful of nickel ore at the nickel mining factory of PT Vale Tbk, near Sorowako, Indonesia's Sulawesi island, January 8, 2014.
IN PHOTO: A worker poses with a handful of nickel ore at the nickel mining factory of PT Vale Tbk, near Sorowako, Indonesia's Sulawesi island, January 8, 2014. Indonesia's ban on exports of key mineral ores - unless they are processed in the country - risks backfiring as weaker commodity prices mean it is not cost-effective to invest in expensive smelters and refineries. Picture taken January 8, 2014. REUTERS/Yusuf Ahmad

Australian diversified mining and exploration company Independence Group announced that it would be acquiring West Australian nickel producer Sirius Resources in a share swap amounting to $1.8 billion.

Independence Group (ASX:IGO) will be buying into Sirius Resources (ASX:SIR) for $4.38 per share. A statement from Independence Group revealed that the merger will lift the pro forma market value of the combined companies to $2.7 billion.

Independence Group's website noted that the company produces gold, nickel, copper, zinc and silver from its three mining operations in Western Australia. The company's share price is up 1.86 per cent as of this writing to $4.84. Sirius Resources' share price meanwhile closed at $3.79 on Thursday. Motley Fool Australia notes that Sirius Resources' share price jumped by as much as 21 percent a day after the merger, "making it the strongest-performing stock" on the S&P/ASX 200.

Under the terms of the takeover, Sirius will have to demerge from its Polar Bear and Scandinavian assets including the Baloo gold deposit. The demerger will create a new entity called S2 Resources Ltd. that will manage the mentioned assets and will be led by managing director Mark Bennett.

"The proximity of the Sirius and IGO assets in Western Australia creates opportunities to realise synergies and cost efficiencies across a dominant land-holding position," IGO managing director Peter Bradford in the statement.

"The combination, I think produces synergies, not just cost synergies relating to bringing two corporate entities together, but synergies as a result of complementary skill sets and capabilities all within one region," Bennett told ABC.net. "IGO provides the operational, exploration and marketing capability while Sirius provides project development and exploration capability.”

Sirius Resources owns the world-class and fully-financed Nova-Bollinger nickel/copper development project in the Fraser Range in WA's Goldfields. According to Independence Group's statement, the Nova mine is expected to begin production later next year. It is currently under construction.

Amur Minerals Corporation (London AIM:AMC) is also one company that owns a promising nickel project. Its Kun-Manie mine, which is located in the Russian Far East, could produce 841,000 tonnes of nickel.

The company's "Detailed Exploration and Mine Production Licence" was approved by the Russian government last Friday. To finalise the transaction, Amur needs to submit a payment of 23.6 million roubles [$590,000] within 30 days. The license provides Amur's Russian subsidiary ZAO Kun-Manie the rights "to recover all value from the mineral defined to be present at Kun-Manie," according to a statement it issued. According to the company's website, the project is situated right on top of the Kun-Manie Massif, a geologic structure rich with sulphide nickel, copper, cobalt, platinum and palladium.

Contact the writer: a.lu@ibtimes.com.au

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