BHP has repeated its determination to take over Canadian nickel explorer Noront Resources, despite a mooted higher offer from Wyloo Metals, one of the stockmarket vehicles of Fortescue Metals chair, Andrew “Twiggy” Forrest
Wyloo Metals has indicated is prepared to offer 70 cents Canadian for Noront which controls some major prospects for copper, nickel and cobalt in the James Bay area of Northern Ontario in the so-called Ring of Fire region. (Wyloo owns 37.5% of the company bought on market late in 2020 and earlier this year) and top BHP’s 70 cents C a share offer.
In revealing its willingness to lift its offer, Wyloo said it was willing to work with existing shareholders, keep Noront listed and replace the current board and make Forrest as chairman.
BHP responded by highlighting to Noront shareholders the “uncertain and conditional” nature of Wyloo’s proposal, which was non-binding and may not result in an offer being made.
“Despite their latest press release, Wyloo has not made a formal offer,” BHP chief development officer Johan van Jaarsveld said in a statement. “The BHP offer is the only transaction currently available to Noront shareholders.”
BHP said it remained “confident” in its offer and would consider its options if a compelling offer from Wyloo materialised. Mr van Jaarsveld said Wyloo’s support was not required for BHP’s offer to be successful.
“We have the financial strength, world-class mining expertise, and commitment to work in partnership with stakeholders to advance Eagle’s Nest and the Ring of Fire, which has the potential to deliver benefits to local communities, First Nations, and Ontario for years to come,” he said.
Noront has reiterated its support for BHP’s offer, but on Wednesday it said it would provide Wyloo with a confidentiality agreement to conduct due diligence.
“With BHP’s consent, Noront intends to provide Wyloo with a confidentiality agreement in the same form as Noront’s confidentiality agreement with BHP, but without the customary standstill provision,” CEO Alan Coutts said.
“This will allow Wyloo to complete the due diligence that Wyloo claims is required, and to decide whether or not to make a binding offer to acquire the common shares of Noront that Wyloo does not already own.”
Noront shares closed Tuesday at 75 cents Candian, 7% higher than Wyloo’s non-binding suggested offer, indicating an expectation that BHP will produce a higher price.
Noront has a poison pill structure that it can trigger which will lift the number of shares, dilute Wyloo and allow BHP to buy control.
That pill structure was put in place in May when Wyloo had a 23% stake.
Under the structure, Noront can issue one right for each outstanding share, effective May 26, and the right will allow the shareholders, other than the acquiring person and its related parties, to purchase additional shares at a 50% discount to the then prevailing market price.
