$IGO.AU$ shares are sliding on Thursday morning.

At the time of writing, the ASX battery materials miner's shares are down almost 2% to $5.13.

What's going on with IGO shares today?

This morning, IGO announced that it has entered into an exclusivity deed with Medallion Metals Ltd (ASX: MM8).

According to the release, the deed grants Medallion a period of exclusivity to negotiate a proposed transaction that would see it acquire the Cosmic Boy processing facility and associated infrastructure at the Forrestania Nickel Project. This would occur following the completion of nickel processing at Forrestania.

Medallion Metals revealed that the consideration is proposed to comprise upfront cash to a maximum of $15 million. Whereas the total consideration will be capped at $50 million.

IGO advised that during the nine-month exclusivity period, IGO and Medallion's intent is to conduct due diligence, progress discussions, and negotiate binding transaction documentation.

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. This is subject to any pre-existing third party rights.

Why offload the asset?

Management notes that during FY 2025, IGO will transition Forrestania into care and maintenance.

This is because after 18 years of commercial nickel production from the Flying Fox and Spotted Quoll mines, Forrestania's nickel reserves are approaching depletion.

It believes the opportunity to divest the valuable assets at Forrestania to another party, such as Medallion, would be a positive outcome for both companies.

Importantly, IGO will still retain lithium and nickel rights at Forrestania. This could be good news given that its exploration team is continuing to progress work at the South Ironcap prospect, where spodumene bearing pegmatites have been discovered.

Why buy the asset?

Medallion's managing director, Paul Bennett, explained why buying the asset makes sense for his company. He said:

This is a transformational opportunity for Medallion. Bringing the established high-grade gold-copper resources at Ravensthorpe together with the Forrestania infrastructure has the potential to unlock significant value in a short space of time. Additionally, establishing gold processing capability at Forrestania creates an opportunity to commercialise stranded deposits in the region as well as reinvigorate gold exploration across the highly prospective Forrestania greenstone belt. We welcome the opportunity to partner with IGO to seek to create a new gold business at Forrestania while allowing IGO to continue to pursue its corporate objectives in the region.

IGO shares are down 62% over the past 12 months.