Noront Resources Ltd. [NOT-TSXV] said Monday it has settled terms of a proposal from Wyloo Canada Pty. Ltd and its Australian parent Wyloo Metals Pty Ltd. that could see Wyloo acquiring 100% of the shares of Noront for 70 cents per share.
The announcement comes after Noront recently issued 96.15 million common shares in full satisfaction of its US$15 million amended and restated loan agreement held by Wyloo Canada Pty. Ltd., which now holds a 37.25% stake in Noront.
The Wyloo offer would mark a 27% premium on a previous all-cash offer worth 55 cents a share from a subsidiary of Australian mining giant BHP Billiton Ltd. [BHP-NYSE, BHPLF-OTCPK].
The Noront Board of Directors, on the basis of a recommendation from independent directors consisting of Noront’s Special Committee of the Board of Directors, and supported by advice from external financial and legal advisors, has unanimously determined that the Wyloo offer constitutes a superior proposal as compared to the outstanding BHP offer, Noront said in a press release, Monday.
Noront now says BHP has the right to offer to amend the terms of its $325 million offer. It said BHP has five business days from receiving notice of the superior proposal to negotiate with Noront, should it decide to do so.
If an arrangement agreement is entered into, Wyloo Metals has pledged to provide a loan of up to $23 million to Noront to fund the termination payment of $13 million, payable to BHP.
It is expected that if the support agreement with BHP is terminated, Noront shareholders, including Noront directors and senior managers, will enter into a lock-up agreements under which they will agree to vote in support of the Wyloo offer.
Under the terms of the arrangement deal, Wyloo Metals will be entitled to a termination payment of $17 million.
Noront looks to be the target of a potential bidding war after it signed agreements with Algoma Steel Inc. and engineering firm Hatch Ltd. to facilitate development of the Ring of Fire mineral district in northern Ontario and associated processing facilities.
Noront is hoping to extract nickel and chromite from its properties in the Ring of Fire area in partnership with local First Nations. Those properties include the company’s 100%-owned Eagle’s Nest deposit, which it has described as the highest- grade nickel-sulphide find in Canada since the Voisey’s Bay discovery in Labrador.
BHP announced its offer on July 27, 2021, saying that Noront represents a growth opportunity in a prospective nickel basin capable of delivering a scalable, new nickel-sulphide district and provides the BHP group with more growth options in future facing commodities.
On Monday, Noront shares eased 6.1% or $0.05 to 77 cents on volume of 1.12 million. The shares are trading in a 52-week range of 83 cents and 15 cents.