Monsters of Rock: Well that was quick, Forrest strikes again on Noront

No sooner had BHP (ASX:BHP) announced the failure of negotiations between it and Andrew Forrest’s Wyloo Metals over Canadian nickel company Noront Resources, than Forrest engaged in some choice peacocking by flashing a shiny C$1.10 per share offer in the faces of Noront’s shareholders and board.

That is a 47% premium from Forrest, whose entities already own 37.2% of Noront, over the top of BHP’s C0.75c a share bid which had appeared to trump Wyloo’s previous C$0.70c offer.

The BHP offer was already a 213% premium to Noront’s share price before the bidding war began.

What is the actual prize here?

Wyloo has a number of investments in nickel companies, mainly on the ASX, including Mincor Resources (ASX:MCR), Poseidon Nickel (ASX:POS) and Western Areas (ASX:WSA) where Forrest’s growing stake has made him a very interesting observer to takeover talks from IGO (ASX:IGO).

While Forrest has resisted expanding his iron ore business Fortescue Metals Group (ASX:FMG) into battery metals, he has long pursued nickel investments, which appear to align with the ESG agenda he is pushing with FMG’s green hydrogen initiatives and his philanthropic activities.

He has priors in the industry at the helm of Anaconda Nickel, developer of Glencore’s Murrin Murrin nickel mine back in the late 90s.

Noront owns the dominant land position in the “Ring of Fire”, a geological feature 500km northeast of Thunder Bay in Northern Ontario so named for the circular shape its mafic and ultramafic rocks make on magnetic maps, wrapping around a circular intrusion of granodiorite.

Its flagship Eagle’s Nest project is shaping as an underground mine producing around 150,000 tonnes of nickel-bearing concentrate a year over an initial 11 year mine life.

The nickel-copper-PGE deposit hosts proven and probably reserves of 11.1Mt at 1.68% nickel, 0.87% copper, 0.89g/t platinum and 3.09g/t palladium, with inferred resources of 9Mt at 1.1% Ni, 1.14% Cu, 1.16g/t Pt and 3.49g/t Pd.

Noront’s second priority is the Blackbird chromite deposit 1km away.

Wyloo’s latest bid values the Canadian junior at more than three times the ~$140 million Forrest’s initial C0.315c bid back in May that started off the corporate love triangle.

Wyloo says its offer provides greater certainty for Noront shareholders given the major shareholder does not intend to support any competing bid, provides the option for them to accept or remain a shareholder in the company and is a clearly superior price to the last BHP bid.

Its other benefit is its promise of a “world-class Board of Directors revitalised under the leadership of a new Board of Directors, led by Dr. Andrew Forrest AO”.

On the market iron ore miners including BHP, Rio (ASX:RIO) and Fortescue (ASX:FMG) led a 1.55% run for the materials index as iron ore futures soared on news China will take moves to stabilise its economy next year.

Fresh out of a trading halt and $75 million capital raising lithium developer AVZ Minerals (ASX:AVZ) was the standout stock, gaining 17.8% to an ATH with Ioneer (ASX:INR) close behind.

Passive buying from their inclusion in a major rare earths and strategic metals index could have played a role.

$AVZ.AX and $INR.AX are up a LOT today… if you are wondering why, the stocks were included in the MVIS Rare Earth/Strategic Metals Index.$LTR.AX was included in the index in September and rallied 40% in a week.

Read more about the passive impact. 🔐https://t.co/ZPax48CL8M

— Brian Freitas (@tradingarb) December 13, 2021