BHP pips Forrest in Canadian nickel battle
BHP has raised its bid for Toronto-based Noront.
BHP has raised its offer for Canadian nickel explorer Noront Resources by $128 million as it tries to wrest control of the company off billionaire Andrew Forrest.
BHP told Noront investors on Wednesday it was willing to pay C75¢ for each share in the company, under a proposal that values Noront at about $C443 million ($480.7 million).
BHP has raised its bid for Toronto-based Noront.
The improved offer by BHP comesbarely 24 hours after Mr Forrest’s company Wyloo Metals secured the supportof the Noront board for its C70¢-per-share offer. The Noront board has now swung its support behind BHP.
Toronto-based Noront has acreage ringing James Bay in northern Ontario that is expected to be prospective for many metals, particularly nickel.
But there is no infrastructure nearby, meaning its assets are many years away from being developed, if at all.
Most players in the resources sector, including BHP, believe the particular type of nickel geology that occurs in eastern Canada and Western Australia – nickel sulphides – will be most attractive to the manufacturers of modern batteries.
Glencore and Brazilian miner Vale both have significant nickel mining businesses about 400 kilometres south of Noront’s acreage.
The major alternative geology is nickel laterites, which are found in places such as Indonesia and will be a more expensive source of battery-grade nickel.
In July, BHP had valued Noront at $C325 million when it offered to acquire all shares in the company for C55¢.
Mr Forrest controls about 37 per cent of Noront, but BHP insisted it did not need his support given the deal requires support from 50 per cent of the Noront register to succeed.
BHP said its offer was valid until November 9.
Wyloo was considering the revised BHP bid and its options on Wednesday.
Mr Forrest has a long history with nickel having launched the WA mine that is now known as Murrin Murrin back in 1999 when it was known as the Anaconda mine.
Challenges with processing the ore led to Anaconda’s demise and Mr Forrest’s exit, but the mine was re-established and is now owned by Glencore.
Newcrest chief executive Sandeep Biswas was among the team that sorted out Murrin Murrin’s processing challenges.
For much of the past decade, Mr Forrest has retained a low-key interest in nickel through stalled ASX listed miner Poseidon, which hopes its WA nickel assets will be more viable if the ore can be processed into higher-margin products ata battery material refinerythat is proposed for Kalgoorlie.
But Wyloo has become far more active in the nickel sector in recent times and Noront may not be the only transaction where Wyloo plays a kingmaker role.
Wyloo took a substantial shareholding in WA nickel miner Western Areas in August, just days afterStreet Talkrevealed that IGO Limited had started merger talks with Western Areas.
Wyloo also has a substantial stake in ASX listed Mincor, which is restarting WA’s Cassini mine and will provide feedstock for BHP’s Kambalda nickel concentrator then BHP’s Kalgoorlie nickel smelter.
It is unclear whether Wyloo has a stake in ASX listed Panoramic Resources, but it would not be a surprise if Wyloo was lurking below the 5 per cent shareholding threshold that requires disclosure to the ASX.
Panoramic is run by Nick Cernotta, who was a crucial player in Mr Forrest’s iron ore company, Fortescue, lowering its production costs and rising to prominence.
Panoramic produced its first nickel, copper and cobalt concentrate from its restarted Savannah mine in the Kimberley region this week, which was good news for the company that owns almost 20 per cent of Panoramic; Western Areas.
IGO Limited owns acreage on both the western and eastern sides of the Savannah mine.
(20min delay)