Noront Resources Ltd. settled an arrangement agreement with Wyloo Metals Pty Ltd. and Wyloo Canada Holdings Pty Ltd. where Wyloo Metals will acquire all of the issued and outstanding common shares of Noront it does not already own. The amount is C$1.10 per common share, which is a 358% premium to the unaffected closing price on May 21 and an approximate 47% premium to the cash offer of C$0.75 per common share made by BHP Western Mining Resources International Pty Ltd.
“Working hand-in-hand with First Nation and regional partners, we’ll develop the Ring of Fire into one of Ontario’s great mineral districts that will be pivotal in the world’s transition to a lower carbon future,” Head of Wyloo Metals Luca Giacovazzi said.
Wyloo Metals has also agreed to provide a loan to Noront of up to C$29.38 million to finance, among other things, the termination payment of C$17.78 million payable to BHP upon the termination of the support agreement, as well as other transaction related costs. The term of the Wyloo Loan will be 12 months from completion of the transaction, with interest of 5% per year payable quarterly in either cash or common shares of Noront.
If the support agreement is terminated, certain Noront shareholders, including Noront directors and senior management, will enter into lock-up agreements under which they will agree to vote in support of the Wyloo Offer. Wyloo Metals currently holds approximately 37.2% of the outstanding common shares.
Wyloo Metals will be entitled to a termination payment of C$26 million if the arrangement agreement is terminated.
BHP has chosen not to increase or extend its offer.
“BHP is committed to its strict capital discipline framework,” BHP Chief Development Officer Johan van Jaarsveld said. “While the Eagle’s Nest deposit is a promising resource, we do not see adequate long-term value for BHP shareholders to support an increase in BHP’s offer in order to match the C$1.10 per share proposal from Wyloo Metals Pty Ltd.”