Australian mining magnate Andrew Forrest launched an AUD$760 million takeover bid for Mincor Resources, 35 per cent above Mincor’s closing price on Monday. The Mincor share price has fallen 49 per cent over the past 12 months. Forrest is using his privately owned Wyloo Metals, which already owns 19.99 per cent of Mincor. Mincor is a key supplier to BHP’s reborn Nickel West division. The lower impurity Mincor ore seen as an important part of the BHP nickel blend.
Forrest has not been quiet about both his private company and iron ore giant Fortescue Metals Group’s quest to gain greater exposure to rare earths and battery minerals like nickel.
Mincor chief executive officer Gabrielle Iwanow responded to the bid; “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.”
Her advice is for shareholders to stay put. “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.”
BHP declined to comment on Mincor or whether it had any interest in the takeover play.
This move is not the first move by Forrest into BHP territory, which many see as a battle. Wyloo took a near 38 per cent stake in Canadian Noront Resources for $US26.5 million in December 2020 ahead of BHP.
Noront’s Eagle’s Nest high grade nickel project and other assets in the Ring of Fire region, about 1200 kilometres north of Toronto excited BHP. The mining giant launch a bid which became a bidding war with Wyloo winning in a bitter fight. Noront has been renamed Ring of Fire Metals and former Glencore Nickel executive Kristan Straub installed as chief executive.
“Canada has a long and proud history of nickel production, but in the past 12 months we have seen a raft of investments in EV and battery manufacturing facilities, midstream processing plants and even mines themselves.
Mincor lost $54.7 million in its half year to December 2022, blaming a slower-than-expected ramp-up of mining activity and ineffective hedging. Mincor in 2022 revived its Kambalda nickel operations which facilitated the re-start of the BHP concentrator at Kambalda which had been in care and maintenance since 2018.
Mincor has forecast production of 8000-10,000 tonnes of nickel concentrate in 2022-23. It got first ore out of the Cassini mine a year ago and celebrated the re-start of the Kambalda concentrator last May.
Mincor and BHP
Mincor supplied 124,967 tonnes of nickel ore to Nickel West at an average grade of 1.81 per cent in the six months to December 31 and 1943 tonnes of nickel in concentrate, which generated $42.9 million in revenue.
Mincor has an off-take agreement in place with BHP. However, this is not long term and covers only part of production from Mincor’s underground nickel sulphide mines made up of Cassini and its Northern operations.
Mincor has the dominant land package in the region with hopes of finding additional mineralization around its Cassini and the Northern operations. BHP owns the Kambalda concentrator in the area.
It gets trickier for BHP as another supplier to Nickel West, IGO, owns 7 per cent of Mincor and is part of a joint venture with Wyloo investigating a new nickel sulphate plant in Western Australia. Last year Forrest supported IGO’s $1.09 billion, all-cash IGO bid that secured Western Areas, another BHP nickel supplier. Wyloo bought Western Areas shares above the IGO offer price takingt its stake to 9.8 per cent in the weeks before pledging support.
IGO said it would likely build a pre-cathode active material (pre-CAM) facility if it did go ahead with building a nickel sulphate plant with Wyloo. The move would see Australia being able to produce batteries on onshore eventually.
BHP and OZ Minerals
BHP aware of losing nickel feedstock sources, at least at prices it wants, launched a $10 billion deal to buy copper producer OZ Minerals. The acquisition would also give BHP control of the West Musgrave copper-nickel project in remote WA, which could be developed to provide feedstock to the BHP Nickel West business and supplement production from the Mt Keith and Leinster mines.
BHP chief executive Mike Henry last week said “We’ve got the world’s largest copper resource, world’s second largest nickel sulphide resource”. “We have a great set of infrastructure in place in Nickel West in WA. We’ve moved a little bit further downstream in terms of the battery raw materials production supply chain in that we’ve stood up our first nickel sulphate plant.
“So we’ve gone from just producing nickel to now producing nickel sulphate which then goes into battery precursor which goes into battery manufacturing.”
Mincor Resources NL (ASX: MCR) is an Australian producer of clean, high-grade nickel sulphides for the exciting and rapidly growing green-energy battery sector. Mincor’s operations center on the world-class Kambalda district of Western Australia, one of the world’s premier nickel mining provinces.
Source: AFR, Mincor
From The TradersCommunity Resource Desk