Wyloo Metals has secured the shareholder support it needs to take over nickel player Mincor Resources, in what could prove a key deal for Andrew Forrest's downstream processing ambitions.
Wyloo Metals has secured the shareholder support it needs to take over nickel player Mincor Resources, in what could prove a key deal for Andrew Forrest's downstream processing ambitions.
Acceptances for Wyloo's $1.40 per share cash offer for Mincor Resources ticked past 90 per cent this morning, giving the Tattarang subsidiary leverage to proceed to a compulsory acquisition.
Chief executive Luca Giacovazzi, who has spearheaded Wyloo for the best part of six years, was pleased with the timing of the transaction.
“We acquired the business right before it was about to reach its prime, we’re really looking forward to working with the team there,” Mr Giacovazzi said.
Wyloo launched a takeover of Mincor Resources as it approached the pointy end of the ramp-up process at its Kambalda nickel operations, assets the target had brought back to production in 2022 after being suspended in 2016.
Mr Forrest's company already had a substantial foothold of 19.9 per cent before moving in on the company in March this year.
Critically, the acquisition progresses Wyloo from explorer to producer status.
Mr Giacovazzi’s team has not been shy about getting stuck into aggressive M&A to secure assets aligned with the energy transition thematic, particularly nickel.
In 2021, the group closed a $600 million-plus acquisition of Canadian nickel miner Noront Resources and the Eagles Nest deposit near Ontario, after a lengthy bidding war against BHP.
At the start of 2022, Wyloo strategically bumped up its stake in former nickel play Western Areas, which had agreed to a merger with IGO not two months before.
More than a year later, and IGO and Wyloo are working together to build what will be the first Integrated Battery Material Facility in Australia and a big move for downstream processing in the state.
Albeit several years away, it's expected product from the Kambalda mines will be fed into the planned downstream facility once operational.
Still in the planning and engineering stages, he indicated there was likely to be an announcement regarding who would be brought in to partner on the battery project before the end of the year.
A final investment decision has been targeted for the end of next year.
Commenting on the transaction, Mr Forrest, who is Tattarang chair, said the market would be given a choice between clean nickel and dirty nickel.
“Wyloo has targeted nickel sulphides as they are the greenest and cheapest option for battery manufacturing: they have the best economics, can be processed into battery grade nickel with the lowest environmental footprint and are fully recyclable,” he said.
Speaking with Business News, Mr Giacovazzi was seemingly unperturbed by recent ore quality issues that Mincor had been grappling with, before they were thrust into the spotlight amid the transaction process.
Acknowledging that it was a factor that would need to be managed when the takeover had been finalised, he seemed confident it was largely a ramp-up issue.
“The first thing to note is arsenic in Kambalda is not new. It’s something that’s had to be managed since the 70s,” Mr Giacovazzi said.
“During ramp-up you had two mines at different phases, one ramped up quicker than the other so the blending strategy was out, but it’s something that over time rectifies itself.”
Quality issues were flagged by Mincor in late March when it told the market it had delivered off-specification product - which is processed at BHP's Kambalda nickel concentrator - during the ramp-up stage of its flagship.
Mincor had sought to renegotiate offtake terms but said BHP would not agree to it, with the pair now negotiating on whether BHP will waive conditions tied to their purchase agreement.
The outcome of those negotiations and whether there are any financial implications remains to be seen, however, both parties have previously noted that they have a good working relationship.
Mr Giacovazzi was particularly upbeat about exploration potential in the Kambalda area.
“The mines in Kambalda have had five-year mine lives since the 1970s. Mining companies have historically focused on incrementally extending production, but none have taken a systematic approach to exploring the Kambalda and Widgiemooltha Domes," he said.
“We think the district has huge potential and we’re looking forward to investing more into exploration.”
There’s still a question mark regarding how Mincor chief executive Gabrielle Iwanow, who had been leading Mincor for just over seven months before the takeover was launched, will fit into the new company.
Mr Giacovazzi indicated he wasn’t expecting any major changes to the business.
“Gabrielle’s been fantastic, she’s a very valued employee and we’re looking forward to working closely with her,” he said.
