Some strong ‘hints’ below on the direction Andrew Forrest/Luca Giacovazzi/Wyloo metals (who will continue to acquire shares in WSA) want to steer WSA.
I highlighted all the IGO mentions
The head of Andrew Forrest’s private metals play has revealed the company is positioning itself for a consolidation of the WA nickel sector that could rival BHP’s dominant Nickel West business.
Wyloo Metals head Luca Giacovazzi made the comments on Monday after the company announced what it hopes is a knockout blow in its takeover battle with BHP for Canadian nickel play Noront Resources following the end of peace talks between the two players over the hotly contested target.
Wyloo raised its bid for Noront to $C1.10 a share valuing the target at $C616 million. The valuation represents a 47 per cent premium to BHP’s latest C75¢ offer and a near 600 per cent jump on what the Forrest entity paid for its initial stake in the Ring of Fire player a year ago.
Wyloo is also emerging as a player in the WA nickel scene with Mr Giacovazzi saying he believed there was scope for another downstream processing plant in WA if smaller players “came together”. “We’re very much of the view, and championing the idea, that there should be consolidation in the WA nickel space,” he said. “It’s been a long time coming.”
Wyloo Metals head Luca Giacovazzi. Credit: DAVID BROADWAY
Nickel West has a monopoly on the downstream processing of nickel in WA with three concentrators at Mt Keith, Leinster and Kambalda, a smelter at Kalgoorlie and a refinery in Kwinana.
But it is also reliant on third party feed.
Smaller nickel producers such as Western Areas and IGO both sell at least some of their concentrate to Nickel West for further downstream processing, while emerging miner Mincor is set to sell all its ore to the company’s Kambalda concentrator when its operations come online in the second quarter of next year.
Once unloved within the BHP portfolio, Nickel West has taken on a new cherished role within the mining giant as a key supplier of nickel products to the burgeoning electric vehicle battery sector.
“The logical thing is for some of the smaller players to come together and rival Nickel West,” Mr Giacovazzi said. Wyloo recently upped its stake in Western Areas to 6.3 per cent, which could see it become a player in takeover talks between the nickel miner and suitor IGO. Western Areas opened its books to IGO in September but talks over a rumoured scrip deal have been glacially slow. Mr Giacovazzi said Wyloo would continue to build a meaningful position in Western Areas to ensure the opportunity for consolidation was not lost. “We would struggle to form a view on a very scrip-heavy deal by IGO and I think that’s why we’re positioning ourselves the way we are,” he said.
Mr Forrest also holds positions in aspiring producers Mincor and Poseidon Nickel.
BHP is also thought to be a potential bidder for Western Areas given it is looking to add scale to its Nickel West business.
IGO has previously eyed plans for a $530m nickel sulphate plant but abandoned the idea after striking improved terms for two offtake agreements for concentrate from its flagship Nova mine with Nickel West and Swiss commodity trader Trafigura. However, IGO managing director Peter Bradford revealed recently the plans could be revisited if the company could extend the life of Nova or secure a new mine with a longer life. Western Areas’ proposed Odyssey underground nickel project at the Cosmos complex near Leinster is seen as a prized long-dated mine that could deliver the scale needed to build a downstream processing plant.
Acquiring Western Areas would also hand the acquirer a 19.9 per cent stake in re-emerging Kimberley nickel miner Panoramic Resources.
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