In ASX news from Monday, Twiggy Forrest’s Wyloo is happy to sit tight for the moment on its Mincor bid, while Evolution Mining has given a further update on its problems at Ernest Henry.
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Andrew ’Twiggy’ Forrest’s privately owned Wyloo Metals group has made its $1.40 per share bid for WA Nickel producer Mincor (ASX: MCR) final – meaning, barring a higher offer, it can’t change the price of its $760 million offer.
Wyloo is making the bid from subsidiary, Wyloo Consolidated and claims to have amassed a stake of nearly 20% in Mincor via direct ownership and through derivatives (such as contracts for difference).
The decision to make the price ‘final’ came despite Mincor revealing last week that its nickel concentrate supply contract with BHP is in trouble because of quality problems with some of the product being outside specifications (believed to be the amount of arsenic allowed in the concentrate).
The news saw Mincor shares lose more ground to close at $1.405, a long way from the post bid peak of $1.55 a week or so ago.
With no love lost between the Forrest camp and BHP (the win by Wyloo over BHP for control of Canadian nickel explorer, Noront in 2022 soured relations while Forrest’s Fortescue metals Group and BHP are direct competitors in the Pilbara iron ore market. Both operate out of Port Hedland in the WA Pilbara where they jostle for priority).
Wyloo’s statement seemingly accepted that news but didn’t mention a report in the Australian Financial Review that the Mincor supply deal with BHP contains a ‘change of control’ clause which would allow BHP to cancel the arrangement if control of Mincor should change.
The AFR reported Monday that, “BHP has put a secret change of control clause in the contract that gives it rights to all the nickel produced by Mincor Resources, setting up another potential complication for Andrew Forrest as he mulls whether to spend $760 million to acquire the company.
“Wyloo notes Mincor’s Operations and Guidance Update announced to the Australian Securities Exchange on 30 March 2023, and confirms that it was unaware of the material information contained within that announcement,” Forrest’s bidding company told the ASX after the AFR was published online at 5am Sydney time on Monday.
“As a result of these developments, Wyloo has determined that the current offer price of $1.40 per share is best and final and will not be increased, in the absence of a competing proposal.”
“As such, Wyloo Consolidated considers the likelihood of a successful competing proposal emerging for Mincor is low,” Wyloo said in its first amended bidder’s statement to the ASX.
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Evolution Mining (ASX: EVN), meanwhile, remains confident that rehabilitation of its Ernest Henry gold copper mining operation in North Queensland from the impact of March’s deluge and flooding is heading towards the resumption of activities within the six-week timeline laid out last month.
In an update on Monday, Evolution said that it has seen significant progress in removal of water from the mine with successful restart of the main pump station on the 1325 level; Restart of the concentrator with processing of lower grade stockpile material as well as toll treating of third-party material; and the completion of the remediation of the main area of water ingress.
Evolution said the full impact on its 2022-23 guidance will be provided in conjunction with the March 2023 quarter results to be released on April 20.
“This will take into consideration the progress of the recovery at Ernest Henry.
Evolution CEO Lawrie Conway said, “The team has made excellent progress in managing the many challenges caused by the extreme weather event and to be on track to resume mining activities within the original timeframe is a credit to everyone involved.
“The closing cash balance demonstrates the strength of the balance sheet and the transition of the business to net cash generation with around $96 million generated in the March Quarter. Additionally, this has been achieved at a gold price materially lower than the current spot gold price.
Evolution shares eased 0.3% to $3.11.
