Andrew “Twiggy” Forrest’s entity Wyloo Metals recently launched a $760 million takeover bid for Australian nickel miner Mincor Resources NL (ASX: MCR) at $1.40 per share.
MCR shares surged to an intraday high of $1.67 that day, before closing $1.54.
Forrest’s interest in MCR shares is a story that fund managers and brokers have been keeping an eye on for some time. After first appearing as a substantial shareholder in December 2019, Twiggy became a 19.9% shareholder following a placement in December 2022.
With a personal fortune of ~$32 billion, Twiggy has bided his time for the nickel price to fall amid market uncertainty before attempting to mop up the remaining MCR shares that he does not own.
The bid for MCR shares represents a 35% premium to the previous day’s closing price, indicating the premium that major miners are willing to pay up for high-quality mineral deposits in future-facing metals such as nickel and copper.
Another bid coming for Mincor shares?
The bid appears opportunistic, a sentiment echoed by analysts at Royal Bank of Canada. Mincor will be hoping that its value grows as production ramps up.
Rumours are swirling regarding the potential for an overbid from BHP Group Ltd (ASX: BHP), especially given what transpired between BHP’s Nickel West and Twiggy Forrest for control of Canadian-listed nickel player Noront Resources.
Noront’s high-grade nickel discovery attracted a bidding war where the first bid of C$0.315 was eventually escalated to a C$1.10 buyout from Wyloo.
BHP currently purchases nickel concentrate from MCR through an offtake agreement for part of MCRs underground production.
The other player to keep an eye on is IGO Ltd (ASX: IGO), which is a 7% shareholder of MCR and entered into an agreement with Wyloo to jointly evaluate downstream opportunities. IGO paid over $1 billion for Western Areas last year.
Mincor’s takeover offer comes hot on the heels of BHP swallowing up ASX-listed copper miner Oz Minerals Limited (ASX: OZL). So, the major miners have proven their desire to secure battery metals resources at the right price.
Other ASX listed nickel takeover candidates
While it is always difficult to predict takeover activity, we at Seneca invest selectively in resource development companies that have both standalone value as well as strategic value to a major player.
Mincor’s high-grade resource sits in the tier 1 jurisdiction of Western Australia and stands at 5.9Mt at 3.8% Ni, equating to 223.9kt of contained nickel. Current FY23 production guidance is for 8-10kt nickel.
Elsewhere in Western Australia, fellow producer Panoramic Resources Ltd (ASX: PAN) is expected to produce almost the same amount of payable nickel at 6.6-7.1kt, despite being valued at half of MCR’s (pre-bid) market cap. While MCR’s resource is higher grade, PAN does benefit from copper and cobalt credits. IGO inherited a ~20% shareholding in PAN shares upon its takeover of Western Areas.
For context, the major Australian nickel miners are IGO which produces 33.5-37.5ktpa and BHP’s Nickel West operations producing 80-90ktpa.
Centaurus Metals Limited (ASX: CTM), a developer of a nickel resource in Brazil, will be hoping a DFS due mid-2023 will help to re-rate the stock closer to its NPV. With 108Mt at 0.8% Ni for 938.5kt contained nickel, CTM has the biggest nickel resource on the ASX not owned by BHP.
Galileo Mining (ASX: GAL) has yet to put out a maiden mineral resource estimate for its promising Callisto PGE discovery, however, our analysis of their drill intersections indicates the potential for a resource of substantial scale that is only growing.
GAL recently reported its “widest drill intersection recorded to date” hitting nickel sulphides in an area of mineralisation that remains open along strike.
Near Norseman’s gold fields in Western Australia, GAL is backed by majority owner Mark Creasy (who owns 54% of GAL) who is well renowned for the Nova nickel discovery now owned by IGO.
IGO itself also sits on the GAL register with an 8.28% stake which we are keeping an eye on as it looks to restock its nickel deposits…
