BHP ups bid for Noront

A high-stakes bidding war for control of potentially large Ring of Fire deposits of nickel, copper and chromite continued Wednesday, with a global mining-industry giant upping the ante.

Shareholders of Ring of Fire proponent Noront Resources have about three weeks to decide if they will accept the latest offering from Australia’s BHP, which is willing to pay 75 cents per share for Toronto-based Noront.

BHP’s offer is five cents more than a bid on Monday by Australian competitor Wyloo Metals, which Noront had earlier characterized as the best deal for its shareholders. Wyloo began the bidding in May, offering 31 cents per share.

“It’s great to see the value of the Ring of Fire being realized,” said Thunder Bay-based Ontario Prospectors Association executive-director Garry Clark. “Hopefully all parties can move forward toward developing the economics for the area.”

BHP had five days in which to respond to Wyloo’s Monday offer; after it did so, Noront’s board of directors then encouraged its shareholders to support BHP’s latest bid instead.

Noront shareholders must make a decision on whether or not to cash in their shares by Nov. 9, according to a Noront news release.

“In order for Noront shareholders to receive the 75-cent all-cash offer price for their shares, at least 50 per cent of shares not owned by BHP must be tendered, said the Noront news release.

If the transaction goes through, then Noront would be controlled by BHP.

Northwestern Ontario mining-industry observers watched the bidding war with keen interest.

“As the world’s largest mining company, BHP brings the technical capability and financing to develop (Noront’s) Eagle’s Nest nickel-copper deposit, as well potentially open up a new nickel-copper mining district,” said City of Thunder Bay mining-services project manager John Mason.

BHP, which is billed as one of the world’s largest mineral and gas companies, says that, unlike Noront, it has the deep pockets required to advance Noront’s Ring of Fire properties located about 550 kilometres northeast of Thunder Bay.

“Noront’s development and exploration projects have significant funding requirements to bring them to the production stage,” says a BHP backgrounder to shareholders.

“Noront currently has limited cash to fund the necessary capital projects and near-term debt maturities, which will be a further drain on cash,” it adds.

BHP warned that if Noront struggles to make debt payments and other obligations, that could reduce the value of its shares.

“Our offer provides shareholders with the value inherent in Noront’s portfolio of projects, including the Eagle’s Nest (nickel) project, delivering shareholders who accept our offer certainty of value and immediate liquidity,” BHP chief development officer Johan van Jaarsveld said in a news release.

Though Wyloo Metals owns just over 37 per cent of Noront’s common shares, its support of BHP’s offer is not required for the transaction to go through, Noront said in a news release.