BHP strikes friendly deal to buy Ring of Fire explorer Noront for $325-million - The Globe and Mail

Alan Coutts, CEO of Noront Resources, in Toronto, on Oct. 24, 2019.

Christopher Katsarov/The Globe and Mail

BHP has reached a friendly agreement to acquire Ring of Fire explorer Noront Resources Ltd. for $325-million, trumping an unsolicited earlier approach from an Australian private equity firm.

Melbourne-based BHP said it intends to pay $0.55 cents a share in cash for Noront, 69-per-cent higher than the company’s closing price on the TSX Venture Exchange on Monday. The offer is also significantly higher than the $0.315 a share proposal made by Wyloo Metals Pty Ltd. in May. Wyloo Metals is a subsidiary of Perth-based investment holding company Tattarang, and owned by the Forrest family, one of the wealthiest families in Australia.

The takeover offer from BHP is a huge vote of confidence in a project that historically has generated a lot of hype, but no mining company has yet been able to make work.

Noront, which has been active in the Ring of Fire since the mid-2000s, has long hyped its projects as containing a treasure trove of “strategic” minerals such as chromite and nickel. But it has never proven the economic case around its biggest projects, and has failed to persuade the provincial and federal governments to invest the billions to develop necessary infrastructure, such as an access road into the region. The mining camp is situated 550 kilometres northeast of Thunder Bay in the James Bay Lowlands in Ontario’s Far North

Over the past few years, Noront has scaled back its ambitions, focusing on trying to prove the viability of a single nickel-copper-palladium project called Eagle’s Nest, and building relations with the First Nations, the critical stakeholders in the region. As Noront’s share price has drifted, it has needed to repeatedly warn investors that the company is a going concern risk.

In a statement, Alan Coutts, the CEO of Noront, said that “BHP has the financial strength, world-class mining expertise and commitment to work in partnership with stakeholders to advance Eagle’s Nest and the Ring of Fire.”

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BHP strikes friendly deal to buy Ring of Fire explorer Noront for $325-million - The Globe and Mail
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