Ground Breakers: Mincor's guidance hit muddies the waters amid $760m Wyloo bid

Mincor Resources expects to release a target statement on Andrew Forrest’s $760m cash bid on April 4
It’s copped a whack in the lead-up after pulling guidance over specification issues with customer BHP
Materials stocks continue strong run as iron ore, copper lift

Corporate shenanigans are flying left, right and centre in the battery metals business.

News of the $5 billion plus bid from Albemarle for Liontown Resources (ASX:LTR) may well have distracted from the fact Mincor Resources (ASX:MCR) is facing its own offer, valued at $760 million from major shareholder Andrew Forrest and his Wyloo Metals.

The bid is interesting because it could see one of Australia’s richest men and biggest mining figures claim control of one of Australia’s few active nickel sulphide producers.

But it could also reignite simmering tensions between Forrest and BHP (ASX:BHP) more than a year after the Pilbara iron ore magnate beat the world’s biggest miner to control of Noront Resources, now rebadged as Canadian nickel explorer Ring of Fire Metals.

BHP has a supply deal for nickel ore from Mincor until 2025, backing its Kambalda nickel concentrator, part of the Nickel West supply chain which sells nickel sulphate for batteries to EV makers Tesla, Toyota and Ford.

Twiggy has his own side hustle with IGO (ASX:IGO) investigating its own move into nickel sulphate and potentially battery precursor production in a potential JV, part of a peace deal that saw Wyloo trade its 9.8% Western Areas stake into IGO’s ~$1.3 billion takeover last year.

Mincor has so far advised shareholders to take no action, and its stock remains trading above the $1.40 Wyloo offer price, in anticipation perhaps of a sweeter deal or bidding war.

A target’s statement is due on April 4, Mincor’s board advised shareholders yesterday.

But a guidance announcement today could well strengthen Forrest’s hand, or see it rethink the bid entirely.

Mincor pulls guidance on specification issues

Mincor shares fell 4% to $1.44 after it pulled guidance (previously 8000-10,000t of nickel in concentrate for 2022-23), after BHP decided yesterday it would not agree to amend its offtake agreement specifications.

The miner currently blends ore from its northern and southern operations but has been delivering off-spec material during what has proven to be a difficult ramp up period.

BHP’s been accepting that material so far and Mincor says it’s been working together with Nickel West to “explore and trial” methods to manage off-spec product going forward, work that remains ongoing.

An amendment would have given Mincor the ability to deliver all of its mined ore to BHP. With a lack of certainty moving forward, it will now need to rethink how to manage off-spec stockpiles.

“Mincor will continue to deliver on-specification ore to BHP and is conducting work to improve orebody knowledge to enable optimisation of its forward mine plan to consistently deliver on-specification product,” the company said in a statement to the ASX.

“Mincor will stockpile any ore that BHP indicates will not be accepted due to product specification requirements, allowing for blending with other Mincor ore sources at a subsequent date.”

Mincor delivered 1,943t of nickel in concentrate in the December half, blaming a $54.7m half year loss primarily on a slower than anticipated ramp up at the Kambalda nickel operations.

In launching the on-market bid, which officially opens on April 5, Wyloo said last Tuesday the offer was a 35% premium to Mincor’s pre-offer opening price, noting its shares had fallen 49% in the 12 months leading up to the takeover attempt.