Wyloo Metals Pty Ltd., an Australian company is offering to acquire Noront Resources Ltd. [NOT-TSXV] for 70 cents a share, marking a 27% premium on a previous offer from a subsidiary of BHP Billiton Ltd. [BHP-NYSE, BHPLF-OTCPK]
Noront shares advanced on the news, rising 25% or 15 cents to 75 cents on volume of 2.42 million. The shares were previously trading in a 52-week range of 64 cents and 15 cents.
Wyloo is the mining division of Tattarang, one of Australia’s largest private investment groups. Wyloo had previously agreed in December, 2020, to acquire the equity and debt interests in Noront that where previously held by U.S. private equity firm Resource Capital V L.P.
Under a purchase agreement between Wyloo Metals and Resource Capital Fund V and Resource Capital Annex Fund V (collectively RCF), Wyloo acquired 22.5% of Noront’s issued and outstanding shares, a US$15 million debenture, and a 1.0% Net smelter royalty interest in Noronto’s Eagle’s Nest deposit.
Wyloo said Monday it has submitted a proposal to the board of Noront as part of a comprehensive strategy to rebuild the company and unlock the future of the Ring of Fire.
Under its acquisition proposal, Wyloo said it will provide each Noront shareholder with the option of either participating in Noront’s growth potential by remaining a holder under a new and proven leadership team, or accepting a superior price for some or all of their shares. Wyloo said it is prepared to acquire Noront shares for 70 cents per share.
News of the Wyloo offer comes after BHP recently has agreed to make a recommended all-cash offer of 55 cents per share for the Toronto-based junior, worth $325 million.
Noront looks to be the target of a 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.
It was envisioned that the chromite would be extracted and then concentrated at source. It would then be shipped by road or rail to processing facilities further south in one of Ontario’s major mining centres, where it would be turned into Ferrochrome, a critical ingredient used to manufacture stainless steel.
Noront has been hoping to see construction of a related Ferrochrome production facility in Sault Ste Marie.
BHP has said 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.
Based in Melbourne, Australia, BHP ranks among the world’s leading resource companies with more than 80,000 employees and contractors on the payroll.
BHP said the highly prospective Eagle’s Nest nickel project provides an excellent platform from which to develop further opportunities in Ontario’s Ring of Fire.