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BHP Group Ltd. had designs on Ring of Fire exploration company Noront Resources Ltd . as early as the spring, but on two occasions its plans were stymied by Wyloo Metals Ltd., Noront’s biggest stakeholder.

Melbourne-based BHP on Tuesday made a $0.55 a share takeover offer for Noront, obliterating a previous $0.315 approach by fellow Australian company Wyloo Metals.

A regulatory filing this week shows that BHP first approached Toronto-based Noront in April with a proposal to acquire a 9.9 per cent stake in the company. While Noront was in favour of the arrangement, BHP needed the approval of Wyloo, the company’s biggest debt holder, before it could go ahead. Wyloo refused to give its consent.

BHP came back in May with a new offer to acquire 19.9 per cent of Noront at a 10 per cent premium to the recent market price. Once again, Wyloo didn’t play ball. “On May 17, 2021, Wyloo informed Noront that Wyloo had determined it would not provide its consent,” the document said.

Seemingly unbeknownst to BHP, Wyloo itself was interested in acquiring Noront. Later that month, Wyloo announced a proposal to buy the 77 per cent of the company it didn’t already own for $0.315 a share, a 31-per-cent premium to the market price.

Noront subsequently rebuffed the approach from Wyloo, and adopted a so-called “poison pill.” The legal manoeuvre makes it prohibitively expensive for Wyloo to buy Noront shares in the open market, thus preventing a creeping takeover.

While Noront is short on cash, its two suitors are flush. BHP is the biggest mining company in the world with a market value of US$183.6-billion while Wyloo is backed by mining magnate Andrew Forrest, one of the richest individuals in Australia.

Wyloo has only been invested in Noront since last December, when it acquired the debt and equity previously held by another private equity firm, Resource Capital Funds. Having bought in before the recent surge in commodity prices Wyloo could come away with a profit if it tenders its shares to BHP. But with a sizable position, it is well positioned for a tussle.

Like BHP, Wyloo has made it clear it is interested in widening its exposure to nickel. Investors will now wait to see if Wyloo can top BHP’s bid. Wyloo owns a 24.4-per cent stake in Noront, compared with BHP’s 3.7 per cent. Wyloo also holds a convertible loan, which it said it intends to convert to shares, which would bump up its stake to 37.3 per cent.

After drifting downward for years amid a slump in base metals prices, Noront is suddenly generating a bidding war. More than a decade ago, the Ring of Fire, situated 550 kilometres northeast of Thunder Bay in the James Bay Lowlands in Ontario’s Far North, generated a once-in-a-generation prospecting rush.

Noront, which has been active in the region since the mid-2000s, had long promoted its projects as containing a treasure trove of “strategic” minerals, such as chromite, which is used in stainless steel production. But the company has never proven the economic case for its biggest projects, and has not persuaded the provincial and federal governments to invest the billions of dollars required to develop necessary infrastructure, such as an access road into the region. Noront’s mining camp is located about 300 kilometres north of the provincial highway network in a swamp.

While Noront is best known for its chromite discoveries, its Eagle’s Nest nickel project is what is driving interest from industry heavyweights. Nickel is one of a number of industrial metals that is increasingly being used in low emission power.

The commodity is prized in particular because it is a key input for electric car batteries. Nickel also represents for BHP one of what it refers to as its “forward facing” commodities, those that are used in greener energy applications. At the moment, nickel makes up only about 3 per cent of BHP’s revenue but the company has made no secret of its intentions to grow its business. Last week, BHP also signed a long-term contract to supply Tesla Inc. with nickel for its electric cars.

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