One of Noront Resources Ltd.’s [NOT-TSXV] biggest shareholders, Australian company Wyloo Metals Pty Ltd., said Thursday it does not support BHP Billiton Ltd.’s [BHP-NYSE, BHPLF-OTCPK] bid to acquire the Canadian junior and its Ring of Fire assets.
Wyloo also said it would consider making a superior offer if it can get access to Noront’s data room.
Noront shares advanced on the news, rising 11% or $0.06 to 62.5 cents on volume of 1.84 million. The shares were previously trading in a 52-week range of 60 cents and 15 cents.
Wyloo is the mining division of Tattarang, one of Australia’s largest private investment groups. 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 convertible debenture, and a 1.0% Net smelter royalty interest in Noront’s Eagle’s Nest deposit.
By converting the debenture into shares of Noront, the Australian firm can increase its stake in the junior to 37.3%
The update from Wyloo comes after BHP Billiton recently agreed to make a recommended all-cash offer of 55 cents-per-share for the Toronto-based Noront, worth $325 million.
Based in Melbourne, Australia, BHP ranks among the world’s leading resource companies with more than 80,000 employees and contractors on the payroll. The mining giant is eyeing Noront’s assets in the Ring of Fire mineral district in northern Ontario.
Noront aims 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.
Wyloo said it was disappointed that the Noront board did not seek to meaningfully engage or negotiate with it prior to accepting the BHP offer.
“Given Wyloo Metals cornerstone interest of approximately 37.3% [partially diluted] of Noront, the minimum mandatory condition for BHP’s bid is unlikely to be safisfied without Wyloo Metals’ support and a second step acquisition is impossible,’’ Wyloo said.
Wyloo said Noront’s Ring of Fire land package hosts some of the most prospective mineral deposits in the world. It said these deposits have the potential to become Canada’s next mineral district, supporting the production of future-facing commodities for multiple generations.
“Wyloo Metals continues to firmly believe in the immense potential of the Ring of Fire and therefore does not intend to support or tender to BHP’s offer,” the company said.
Wyloo went on to say that it would consider proposing a superior offer to acquire the outstanding shares of Noront it does not already should, it be provided with access to due diligence. “Despite numerous attempts to date, the Noront board has denied Wyloo Metals from obtaining access to due diligence on reasonable terms for a shareholder with a cornerstone position.’’