Noront Resources picks Wyloo bid over BHP
A months-long battle over nickel-copper miner Noront Resources (TSXV: NOT) may have come to an end as the Canadian company said today that it had picked a sweetened bid from Australian mining billionaire Andrew Forrest's Wyloo Metals, over the latest offer from BHP (NYSE: BHP; LSE: BHP; ASX: BHP).
Wyloo's 70 ? per share proposal represents a superior value for shareholders, Noront said, adding BHP has five business days to match the offer. The Australian miner said in a separate statement that its offer represented a 192% premium to Noront's unaffected closing price on May 21, adding it "did not intend to support any alternate offers" for the takeover target.
BHP, the world's largest miner, said in August that it would consider matching Wyloo's raised bid as part of its ongoing strategy of expanding its footprint among future-facing commodities, including nickel, lithium and copper.
The tug of war between the two Australian companies is the latest evidence of the rush global miners are into in order to secure supply of battery metals ahead of an expected surge in demand from electric vehicles.
Wyloo Metals, which already is Noront's top shareholder with a 37% stake as of September, had in May offered 31.5 ? per share for the stock it did not already hold in the company. Noront had adopted a poison pill strategy to stop the takeover.
BHP quickly saw an opportunity and offered 55 ? per share of Noront, representing a premium of 129% to the firm's closing price on May 21, a day before Wyloo's first proposal.
Noront had recommended shareholders to accept BHP's friendly bid, but Wyloo came back last month with the sweetened offer of 70 ? per share.
At stake is Noront's early-stage Eagle's Nest nickel and copper deposit in the Ring of Fire of northern Ontario. The asset has been billed by Wyloo as the largest high-grade nickel discovery in Canada since the Voisey's Bay nickel find in the eastern province of Newfoundland and Labrador.
A welder working at Noront Resources' Esker exploration camp in Ontario's Ring of Fire region. Credit: Noront Resources.
Eagle's Nest is expected to begin commercial production in 2026 with the mine running initially for 11 years.
The mine's start date has repeatedly been pushed back by Noront due to successive federal and provincial governments' inability to consult and reach unanimous agreement with First Nations in the area.
Clean metals hub
Wyloo Metals' intention is to create a "world-class future metals hub" in Ontario. The company has already committed to invest $25 million in studies that will look at the potential to create a local battery metals supply chain in the Canadian province and the potential for a new ferrochrome plant.
Wyloo said the metals hub in the remote area known as the Ring of Fire would be developed in consultation with regional stakeholders and First Nations communities.
"The Ring of Fire is home to expansive deposits of these metals and is ideally located near downstream markets, presenting a once-in-a-generation opportunity to transform Canada into a critical metals powerhouse," said Luca Giacovazzi, the head of Wyloo Metals. "Only Wyloo Metals' offer provides shareholders with the opportunity to share in that journey."
Nickel production would need to increase nearly fourfold to meet expected demand for electric and hybrid vehicles, the company estimates. Likewise, copper output would also need to grow exponentially to meet demand from renewable power generation, battery storage, electric vehicles, charging stations and related grid infrastructure.
Tesla's boss Elon Musk has expressed worries about a looming nickel shortage. He pleaded with miners last year to produce more nickel, promising a "giant contract" for supply produced efficiently and in an "environmentally sensitive way."
The EV maker became involved in March in the development of the conflict-ridden New Caledonia nickel mine, as part of the company's attempt to secure enough supply.