Wyloo’s opportunistic bid to take full control of the Kambalda nickel miner sent the takeover target’s shares soaring on Tuesday to close 42 per cent, or 43.9¢, higher at $1.48 — well above the offer price of $1.40 a share.
It indicates investors expect a higher offer to emerge that analysts say could come from BHP, which relies on Mincor to supply material to its Nickel West business, or IGO, which also supplies Nickel West and owns 7 per cent of Mincor.
Mincor signalled it was fishing for a higher offer when it responded to Wyloo’s bid on Tuesday, noting it was not “best and final”.
Mr Forrest already holds a 19.9 per cent interest in Mincor after amassing the stake through various private family businesses.
RBC Capital Markets analysts in a note described the bid as “opportunistic . . . when considering Mincor was trading at $1.40 a share a month ago”.
The offer price represented a 35 per cent premium to Monday’s closing price of $1.04. The company’s shares have been on a steady decline after reaching a 2023 peak of $1.85 in late January.
RBC analysts noted that while the bid premium was in line with what IGO paid for Western Areas last year at 35 per cent, “it is not a considerable premium to the 30 day (volume-weighted average price) and as such as expect that if Wyloo want to complete the deal a further premium may have to be offered”.
The analysts also named BHP and IGO as potential counterbidders. Wyloo defeated BHP in the takeover battle for Canadian nickel miner Noront Resources in late 2021.
Nickel is a key metal in lithium-ion batteries used in electric vehicles, and demand is set to increase fourfold by 2050, according to BHP’s Nickel West.
Mincor has told shareholders to take no action. It said accepting the on-market bid now could see them miss out on any increase in the offer price, noting Wyloo had not declared it to be “best and final”.
Chief executive Gabrielle Iwanow said demand for high-grade nickel continued to rise as the adoption of electric vehicles gathered pace and countries made moves to decarbonise their economies.
“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,” Ms Iwanow said.
“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.”
Sternship Advisers, Barrenjoey and Gilbert + Tobin have been appointed to advise Mincor and the company said it would provide a formal recommendation “in ample time for shareholders to make an informed decision on how to deal with the offer”, which runs to May 8.
Wyloo said the offer to sweep up the rest of the shares it did not already own was part of its strategy to invest in and develop projects that will produce the raw materials needed for the rapid decarbonisation of the global economy.
“The Wyloo Group believes that the offer represents attractive value to Mincor shareholders, particularly given the current risks and uncertainties associated with remaining a Mincor shareholder in the face of prevailing economic and equity market risks,” it said.
“The Wyloo Group considers these risks may be weighing on Mincor’s valuation, as demonstrated by the 45 per cent decline in its share price over the last 12 months.”
Mincor in December completed a $60m raising to accelerate two projects of its Kambalda operations — ramping up production at its underground Cassini mine and developing its Golden Mile ore reserve at its northern operations.
Mincor started extracting ore from its northern operations in December 2021 and from Cassini in March last year, with its ore transported to BHP Nickel West operations under an ore tolling and concentrate purchase deal.
