Wyloo Metals wants to sweep the board clean at Noront Resources

The Ring of Fire is now a hands-on project for Australian mining magnate Andrew Forrest.

Wyloo Metals, a subsidiary company of Forrest's Tattrarang private investment outfit, is promising new leadership to bring the promise of the James Bay mineral belt to reality as part of its takeover bid of Noront Resources.

In its latest pitch to Noront investors, Perth-headquartered Wyloo wants to clean house at Noront and appoint Forrest as chair of a new board of directors.

While in the early stages of a bidding war with rival BHP, Wyloo issued a new acquisition offer to Noront shareholders on Aug. 30 to acquire the Toronto junior miner's assets in the remote mineral belt 500 kilometres north of Thunder Bay.

In its news release, Wyloo said Forrest intends to "replicate" his success with Noront's Ring of Fire projects just as he did at Fortescue Metals in Western Australia, turning a junior mining company into a $65-billion mining giant in the process.

"After years of little progress, it's understandable that shareholders have lost hope in Noront," said Forrest, who vowed to overcome the infrastructure challenges in the Far North much like his company accomplished 17 years ago to open up the Pilbara region to iron ore production.

"We proved the critics totally wrong and we want to the same in the Ring of Fire," said Forrest.

Privately held Wyloo is Noront's largest shareholder at 23 per cent and intends to increase that to 37 per cent shortly by converting a US$15-million convertible loan note into shares.

At $0.70 in cash per share,Wyloo said their latest offer to Noront shareholders represents a 192 per cent markup to Noront's closing price on May 21 and a 27 per cent premium to BHP's $0.55 per share takeover bid price.

Noront shareholders will have the option of either selling their shares or holding onto them and, in Andrew Forrest's words, "come along for the ride."

Luca Giacovazzi, the head of Wyloo, echoed the sentiment of his boss in an interview with Northern Ontario Business; Noront, in his eyes, has accomplished very little since the discovery of the flagship Eagle's Nest deposit more than 10 years ago.

"If you look at it, the company's made very little progress, especially when we first made our investment in the company (last December). For us, that's a clear indication there needs to be a change at the leadership level and that's why we've proposed an alternative board."

Since coming aboard as Noront's largest shareholder late last year, Wyloo's relationship with Noront began to sour in the following months.

It was learned that Noront was in discussions with BHP about a partnership opportunity surrounding Noront's largely untapped greenfield properties in the Ring of Fire. A strategic exploration alliance was being considered that would make BHP a 19.9 per cent equity investor with cash-strapped Noront.

Wyloo wouldn't grant permission to that partnership.

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Giacovazzi said it spurred Wyloo to make an all-out offer to acquire Noront's assets, the most prized possession being the Eagle's Nest high-grade nickel deposit.

"They (Noront) put us in a very difficult position. Instead of seeing our value eroded, we decided to make that intention toward a bid."

In April, Giacovazzi said he was informed by Noront CEO Alan Coutts that BHP had approached them to "farm out" their exploration assets for $25 million.

"We obviously see huge potential in the Ring of Fire and would love to be part of that story...and to sort of be confronted with that board wanting to just give away...

"The way I describe it is, they had stars in their eyes and it was very hard to shake them from doing this deal with BHP."

He accuses the current Noront board of creating a "roadblock" in denying them access to due diligence information in order make a better offer to shareholders. Giacovazzi said what they know of the actual value of Noront's projects is based on information that's in the public domain.

In siding with BHP's offer, Noront replied earlier this month it's customary for two parties to enter into a confidentiality agreement, something that Wyloo has declined to do.

Wyloo counters the confidential agreement contains an unacceptable standstill clause preventing them from making initial and subsequent offers to shareholders. 

The ultimate prize for Wyloo and BHP is Eagle's Nest, regarded as one of the best undeveloped nickel sulphide deposits in the world.

It contains a proven and probable 11,131,000-tonne reserve of nickel, copper, platinum and palladium with an 11-year mine life, according to a 2012 feasibility. But that's only scratching the surface since the majority of Noront's 156,000-hectare land package hasn't come close to being fully explored, largely due to a lack of exploration capital.

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Mine production is tentatively scheduled for 2026, the goal posts pushed back again due to delays in the start of the environmental assessments (EA) for a 300-kilometre north-south access road. The EAs are supposed to be completed by the end of 2023, immediately followed by a 30- to 36-month construction period of the roads, slated to start in early 2024.

"We've got a strong view on the geology," said Giacovazzi, "and we'd like to be able to verify that, but we'd also like to be able to see how the company's progressed with road development, the discussions they've had with First Nation communities and the agreements they've entered into with the host communities."

Giacovazzi said Wyloo wants to take a deep dive into any project-related studies Noront has completed and wants to review historical exploration data that Noront inherited when they acquired the Cliffs Natural Resources claims and exploration camp in 2015.

He didn't express any difficulty with Noront's exploration strategy; it's more a case of the lack of actual on-the-ground activity due to the lack of financing.

"When you say, are we happy with how they've gone about exploration, I almost say, what exploration? Because they've done very little over the last couple of years.

"For us, that's where we come with a different mentality. We want to put our energy in and resources behind progressing the Ring of Fire. There will be more discoveries. It is hugely prospective, which is why BHP is interested in the area."

Giacovazzi said if shareholders choose Wyloo, they'll see a company with a different management style as evidenced by their concept to develop Eagle's Nest as a zero-emissions mine, award $100 million in contracts to First Nation businesses, and devote $25 million to study battery metal processing opportunities in Ontario.

"We want to see this to be a success," said Giacovazzi, "and there's no stronger endorsement than our chairman offering to step forward to chair Noront."

"I don't think I can stress enough the energy that Andrew will bring to the project is immense. He's been hugely successful at Fortescue (Metals) and he's going to bring that same mentality to Noront."

On the First Nations consultation front, Giacovazzi said they regret not being having a team on the ground for face-to-face discussions, but the pandemic has prevented them from flying to Canada.

"That's probably the biggest shame out of this whole process, that we've had to do everything virtually."

He urges their Indigenous partners to ignore the noise and focus instead on building the relationship.

"We will always approach our First Nation partners with a lot of respect and lot of patience. Building our relationship with them is the most important thing to us. We're trying not to let the whole BHP-Wyloo bidding situation intervene with the conversations we're having with them. "