Another snip from Euroz Hartleys. MCR: Is MCR the next Noront?...

Another snip from Euroz Hartleys.

MCR: Is MCR the next Noront? Will we see a takeover battle again?
Impact

• Wyloo bid comes at a 35% premium to the closing price on the 20th March.
  
  • We note the stock has fallen from a high of $2.80/sh in April 2022 to $1.04/sh; appears opportunistic.
• Why could we expect additional bids?
  
  • MCR ore has a high Fe:MgO ratio which is critically important in blending BHP mined ore from Mt Keith. BHP contract with MCR extends until 31 December 2025.
  • BHP bid would sure up their supply of blend and process feed in Kambalda. The Company would control three (3) Nickel provinces in Australia as a result.
  • What about IGO? Wyloo and IGO have a JV looking at the downstream processing of Nickel. The two-year study is expected to finish in CY24.
• Why could bids be held back?
  
  • Mincor is relatively small and does not necessarily fit the bill of 'The Big Miner' BHP. But does size matter if it is strategic?
  • IGO's a lithium-focused business with substantial Ni reserves to see them through the short term and no immediate need to do a deal.
• MCR is one of 4 Nickel producers in Australia. It has tailwinds with supply-side constraints expected to emerge in FY25. It has a unique position geographically bolstered by recent statements by an Indonesian minister saying they are investigating and will shut down environmentally non-compliant Ni smelters.
• MD **rielle Iwanow buying stock on market on Friday a good sign the Company was on track prior to yesterday's announcement.
• Action
  FY24 remains a key year for the Company as most of hedges are cleared in FY23. The Company will then be exposed to spot prices where we model a step change in cash-flow (FY24 fee-cash @ current spot ~A$123m).
  The Company is well positioned in it's ramp-up cycle, with operationally strong management and a clear focus on driving results for shareholders in a tough operating environment.
  We believe the stock was recently oversold, remains compelling value (highlighted by the opportunistic takeover offer) and we maintain our BUY recommendation and PT of $1.80/sh. Precedent suggests a bidding war could ensue.
  Catalyst
  Further M&A
  March Q results
  Exploration results at Cassini North