BHP came in with a C$325 million offer for Noront in July, after Wyloo floated an initial C$0.315 per share (C$133 million) offer for Noront in May. Wyloo’s offer also included a proposal to develop a “Future Metals hub” in Ontario. Notably, while Wyloo is Noront’s biggest shareholder, the junior’s board did not support its offer and adopted a poison pill provision to block it.
In its release today, Wyloo said it only made the initial offer because of Noront’s intention to strike a deal with BHP that it says undervalued the Ring of Fire assets.
“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,” said Luca Giacovazzi, head of Wyloo Metals. “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.”
Giacovazzi added: “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.”
Noront has said that it sought a bid from BHP in its search for a superior offer to Wyloo’s initial proposal in May.
Wyloo, which now owns a 37.5% stake in Noront, says that given its holding and the superiority of its new offer to BHP’s bid, its proposal has a better chance of success. However, the BHP bid only requires 50% of the shares not already owned by BHP to be tendered.
Details of the proposal
Wyloo says it will give shareholders the choice between retaining some or all of their shares in a revamped Noront, with a board of directors headed by Australian billionaire Andrew Forrest, or taking the cash offer.
Other board members would include: former Sherritt International CEO Ian Delaney; chairman and CEO of Queen’s Road Capital Investment Warren Gilman; and current Noront director Giacovazzi.
In a direct appeal to shareholders, Forrest pledged that Noront would make more progress under his leadership.
“After years of little progress, it’s understandable that shareholders have lost hope in Noront,” Forrest said in a statement. “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 to access our projects. We 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 the immense potential of these assets, I invite them to hold on to their shares and come along for the ride.”
The company adds that it is also committed to creating business opportunities for First Nations communities, pointing to the success of its Billion Opportunities program created in 2011.
In its last statement on Aug. 20, the Noront board encouraged shareholders to tender their shares in favour of the BHP deal as soon as possible. The junior had not responded to the sweetened Wyloo bid as of this morning.
(This article first appeared in the Canadian Mining Journal)
