Fresh off his $A4 billion Fortescue dividend, Twiggy Forrest’s Wyloo Metals has been forced to more than double its initial offer for Canadian nickel and copper explorer Noront Resources, topping a counter bid from BHP in the process.
Noront holds one of the most attractive exploration prospects in Canada in the so-called ‘Ring of Fire’ deposits of northern Ontario (deep snow country). Wyloo started the bidding war earlier this year with a cheapskate 31.5 Canadian cents a share offer (or $C133 million for all of Noront). BHP replied with a 55 Canadian cent agreed offer ($C325 million).
On Monday, after Fortescue revealed a record $US10.3 billion offer and $A3.48 in dividends for 2020-21 (giving Twiggy $A4 billion) Wyloo lifted its offer for Noront to 70 Canadian central a share.
Twiggy might look as though he is on a winner here – Wyloo owns 37.5% of Noront, but the Canadian company doesn’t want his money – the board rejected the offer and adopted a poison pill arrangement to block the offer, hence the board supporting the BHP offer.
BHP must be interested because why would it come over the top of Wyloo and its big shareholding.
Wyloo said in its latest offer that Noront shareholders can choose to receive 70 C cents a share in cash or if they want can remain a shareholder of the company under a new leadership team (hence the old leadership team’s support for BHP?)
BHP’s offer requires more than 50% of Noront’s shares to be tendered to its bid and Wyloo Metals has said it will not support BHP’s offer – so stalemate?
And what is at stake here in remote northern Ontario? an unknown amount of minerals vital to the looming renewable future. BHP is already well down that route with huge copper and nickel interests in Chile and Australia and sees a chance to add those two minerals, plus the relatively rare platinum and palladium precious metals, also vital to renewables.
Noront’s first project is a 100%-owned, high-grade, nickel, copper and platinum group element (PGE) deposit called Eagle’s Nest. It is the largest high-grade nickel discovery in Canada since Voisey’s Bay nickel, copper and cobalt discovery back in 1993.
Twiggy is now trying to scatter his billions of dollars in dividends as widely as possible. There’s his Pilbara iron ore business in Fortescue – immensely strong financially, but looking at an uncertain future as China flexes its financial and political will try push a China first line.
Fortescue, like BHP and Rio Tinto could be in the target zone for the Communist Party-led government which has shown it is not worried about the financial cost of cracking down on its big local companies and billionaires.
Twiggy is trying to build other businesses – he said on Monday that Fortescue Future Industries would spend $600 million on, well future ideas, technologies etc in the coming year – Green Hydrogen anyone?
And he has dairy and meat interests supply China (it’s always China with Twiggy – he is a very large pro Chinese voice in this country at a time when China doesn’t like Australia very much).
Another Forrest company, Tattarang is trying to grab control of Tasmanian salmon farmer Huon Acquaculture from the huge Brazilian meat giant JBS (with a history of animal abuse and bribery by its owners). JBS is already the biggest meat processor in Australia.
Wyloo and Tattarang have picked up nearly 6% of WA nickel miner, Western Areas where another WA miner in IGO (which is now a major lithium player) has a stake and is making merger eyes at. BHP has an involvement because Western Areas nickel mine sell 50% of its output to BHP’s Kalgoorlie nickel smelter. That deal end in early 2023. The other 50% is with Chinese smelter Jinchuan, China’s largest nickel producer.
