Australia’s Wyloo Metals on Monday submitted an acquisition proposal to the board of Noront Resources, offering shareholders C$0.70 a share in cash or the option of participating in the junior’s growth potential by remaining as a holder under a new leadership team led by Andrew Forrest.
The cash offer trumps the C$0.55 a share that BHP earlier this month offered Noront’s shareholders to gain the early-stage Eagle’s Nest deposit – billed as the biggest high-grade nickel discovery in Canada since the Voisey’s Bay nickel find.
Should investors opt to hold on to their shares, iron-ore billionaire Forrest promised them he would “prove critics wrong” and place the Ring of Fire on the map.
“After years of little progress, it’s understandable that shareholders have lost hope in Noront. I’ve personally been in the same position before. Seventeen years ago, people told me Fortescue’s deposits would never be mined because there was no infrastructure access our projects. We have proved those critics totally wrong, and we want to do the same in the Ring of Fire.
“If shareholders share my view, that it’s impossible to place a value today on a new mining district with immense potential of these assets, I invite them to hold on to their shares and come along for the ride,” he said in a media statement on Monday.
Wyloo, which has amassed a substantial shareholding in Noront, argues that shareholders have seen value eroded under the custodianship of the existing board of directors.
The group said it intended to put in place a new board to lead Noront with Forrest in charge as chairperson. Other proposed board members include former Sherrit International chairperson and CEO Ian Delaney, Queen’s Road Capital Investment chairperson and CEO Warren Gilman, and existing Noront director and Wyloo head Luca Giacovazzi.
It would conduct a search for additional directors and executive management.
“In April this year, we were deeply concerned when the Noront board proposed to farm out Noront’s exploration projects to BHP for only C$25-million. Rather than consenting to such a transaction, we decided to make an offer to acquire the company. Our fears were justified when the Noront board completed a deeply discounted 5% placement to BHP, giving away a strategic toehold in the company to an obvious suitor.
“Since our initial proposal, we have listened to the feedback from shareholders who, like us, believe in the future of the Ring of Fire. We believe Noront shareholders deserve the chance to decide whether to join us in rebuilding the company, and not be pressured into selling all of their shares unless they want to,” said Giacovazzi.
Wyloo argues that its proposed offer has a higher certainty of success than the takeover bid proposed by BHP, given that Wyloo owns about 37.5% of Noront’s shares (partially diluted) and does not intend to support or tender to BHP’s offer.
Wyloo said it had requested from the Noront board a “modest period of time” in which to conduct confirmatory due diligence, which it would complete in parallel with the finalisation of transaction documentation.