VANCOUVER – Noront Resources Ltd. [NOT-TSXV] said Tuesday its board has agreed to back a takeover offer from Australian company Wyloo Metals Pty Ltd. worth $1.10 a share. Deal closing is expected to occur in March or April of 2022.
Rival Australian bidder BHP Billiton Ltd. [BHP-NYSE, BHPLF-OTCPK] now has five business days to match Wyloo’s offer.
The announcement comes just one week after Wyloo provided the Noront board with a letter outlining an improved offer to acquire up to 100% of the shares of Noront it doesn’t already own for $1.10 a share.
Noront is focused on the development of high-grade nickel-copper-platinum and palladium assets as well as world class chromite deposits in the James Bay Lowlands area of Ontario. The region is an emerging metals camp known as the Ring of Fire.
Wyloo’s latest offer marks a 47% premium above the 75 cents per share offered under a takeover bid proposed by BHP.
Wyloo already holds a 37.2% stake in Noront and can increase its stake to 37.4% by exercising warrants.
The Australian company has said Noront shareholders will have the option to accept $1.10 in cash for some or all of their shares, or continue to participate in Noront’s unrealized potential by remaining as a shareholder.
On Tuesday, Noront shares advanced on the news, rising 1.85% or $0.02 to $1.10 on volume of 314,680. The shares are currently trading in a 52-week range of $1.10 and 17 cents.
Wyloo has agreed to provide a loan to Noront of up to $29.4 million to fund a termination payment of $17.8 million that will be payable to BHP as well as other transaction related costs.
The term of the Wyloo loan will be 12 months from completion of the Wyloo Metals transaction, with interest of 5% per annum payable quarterly in either cash or Noront common shares.
Noront is being targeted by Wyloo after signing 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.
The junior 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 has previously said Noront represents a growth opportunity in a prospective nickel basin capable of delivering a scalable, new nickel-sulphide district and could provide the BHP group with more growth options in future facing commodities.