• Wyloo lobs bid for nickel miner Mincor afetr recent underperformance
  • $1.40 on market takeover offer values MCR at 35% premium and $760 million
  • RBC: “Optimistic” bid could face opposition, but BHP offer “unlikely”

Mining billionaire Andrew Forrest could become the sole owner of one of WA’s biggest nickel miners and revive tensions with the world’s biggest miner BHP (ASX:BHP) after lobbing a bid valued at $760 million to take out Mincor Resources (ASX:MCR).

Twiggy’s private investment vehicle Wyloo Metals has latched onto a 49% fall in the Kambalda nickel producer’s share price over the past 12 months.

Holding almost 20% of the miner, which owns ground from which most of Kambalda’s historic 1.5 million odd tonnes of nickel metal has been produced, Wyloo’s $1.40 per share bid comes in at around a 35% premium to Mincor’s previous trading price of $1.04.

It will begin purchasing shares on market from today ahead of an official offer opening on April 5.

Mincor has, of course, told shareholders to take no action, warning they will miss the upside of any future bidding action if the buy into the offer now. Sternship Advisors, Gilbert and Tobin and Barrenjoey are in the defence team.

“We are in a world where the adoption of electric vehicles and industrial decarbonisation continues to increase demand for high-grade nickel sulphides,” Mincor MD Gabrielle Iwanow said.

“The grade, location, metallurgy and exploration upside of Mincor’s Kambalda nickel sulphide assets mean that they are highly strategic for industry players operating both upstream and/or downstream in battery and critical minerals.

“As Mincor approaches full ramp-up in mining, and continues to pursue its highly prospective exploration opportunities, we believe that this strategic value will continue to grow.”


WWBD – What will BHP do?

Mincor is, notably, the main supplier to BHP’s Kambalda nickel concentrator, where the main circuit was restarted last year with Mincor’s ore after four summers on care and maintenance since the closure of the Long Nickel Mine, now part of Mincor’s portfolio after its sale by IGO (ASX:IGO).

Its feed is therefore key for BHP, which needs raw materials to feed the Kalgoorlie nickel smelter and a downstream nickel sulphate plant at its Kwinana refinery, from where it supplies global EV makers like Tesla, Ford and Toyota with battery grade nickel.

Once an afterthought slated for closure, the ~85,000tpa Nickel West division is a core part of BHP’s strategy to focus on future facing commodities after selling coal and petroleum assets over the last two years.

But Forrest, who ran original Murrin Murrin owner Anaconda Nickel before making his eventual fortune in iron ore with Fortescue Metals Group (ASX:FMG) and launched mid-2000s nickel revival play Poseidon Nickel (ASX:POS), has signalled his intentions to gain a foothold in the consolidation of the nickel space as demand from electric vehicles and batteries ramps up.

In late 2021 and early 2022 Forrest’s Wyloo won a protracted takeover battle against BHP for Noront Resources in Canada, an explorer since renamed Ring of Fire Metals after the remote nickel and chrome mining district it plans to develop.

It was also a potential blocker in IGO’s billion dollar plus deal to acquire Western Areas last year, but lent its support to the bid after agreeing to work together on a potential downstream battery nickel business.

Whether BHP, currently focused on a $9.6 billion cash takeover of OZ Minerals (ASX:OZL), may be drawn into a bid to preserve its long term investment in the Kambalda concentrator remains to be seen.



While the bid is a 35% premium, Mincor’s shares have already run higher than the offer price, up 42.1% to $1.475.

RBC has a $1.95 price target on the stock and analyst Paul Wiggers de Vries said the investment bank views the bid as opportunistic. It comes after a slower than expected ramp up drove Mincor to a $54.7m half-year loss.

It has maintained production guidance of 8000-10,000t for FY23, its first full year of production since 2015.

“We view Wyloo’s bid as opportunistic as Mincor’s share price has fallen ~26% over the last month on macro-concerns and operational uncertainty around the ramp-up and ore production from the underground operations,” de Vries told clients.

“However, we see this as exaggerated as 1) they have only been stoping ore for less than 12 months, 2) they retained their guidance outlook at the December Quarterly result announcement, and 3) other nickel operators have also been sold off during this period. More so, the concern over the prior months was cash balance, but this was alleviated following the capital raise in December 2022.

“The A$60m capital raise, which was completed at A$1.39/sh and oversubscribed, is in line with Wyloo’s current bid. Wyloo participated in the capital raise, and as such we view the bid as a way for Wyloo to be exposed to the long term nickel growth story of Mincor at a discount.”

Could a further premium be on the cards? One factor could be counter offers, though de Vries thinks one from BHP would be “unlikely”.

“We take the bid as a positive and believe Mincor shares will trade at or above the bid price on the expectation of 1) acceptance, 2) potential counter offers from BHP/IGO (IGO currently owns 7% of MCR), which we view as unlikely from BHP,” he said.

“While the bid premium is in line with what IGO paid for WSA at 35%, it is not a considerable premium to the 30 day VWAP and as such we expect that if Wyloo want to complete the deal a further premium may have to be offered.”


Mincor (ASX:MCR), BHP (ASX:BHP) and IGO (ASX:IGO) share prices today: