(Reuters) - Metals miner Independence Group NL <IGO.AX> on Thursday said it was reviewing its takeover bid of smaller peer Panoramic Resources Ltd <PAN.AX> after the latter flagged underperformance at a key nickel project and said it would likely need to raise funds.
Independence, which last week made a A$312 million ($213.88 million) all-scrip bid for Panoramic, requested the nickel miner's board for due diligence access while noting that Panoramic had breached certain terms of the offer.
"The due diligence conditions of the offer were included to protect the interests of IGO shareholders and, in the context of today's announcement by Panoramic ... those conditions were clearly justified," Independence said in a statement.
Panoramic earlier in the day said production at its Savannah nickel project would fall short of guidance for fiscal 2020, and that it would likely need to raise funds, prompting its shares to post their steepest drop in nearly four years.
The firm also noted it had breached certain conditions of the Independence offer, such as changing guidance, and flagged a possible breach should it raise capital.
The miner's board continued to recommend shareholders take no action with regards to the Independence offer.
Panoramic's top shareholder, investment fund Zeta Resources Ltd <ZER.AX>, previously rejected the Independence offer on the grounds of it being "opportunistic".
Panoramic's stock closed 20.7% lower at A$0.345, its worst day since January 2016. The performance compared with a 0.6% rise in the benchmark share price index <.AXJO>.
($1 = 1.4588 Australian dollars)
(Reporting by Ambar Warrick in Bengaluru; Editing by Muralikumar Anantharaman and Christopher Cushing)
