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Noront Resources Ltd. has agreed to a $391-million takeover from Australian private equity firm Wyloo Metals Pty Ltd., trumping an earlier bid from global giant BHP Group Ltd., but the minerals development company in Ontario’s Ring of Fire region is leaving the door open to a higher offer.

Backed by Australian billionaire Andrew Forrest, Wyloo first proposed buying Toronto-based Noront in May for 31.5 cents a share. Melbourne-based BHP, the world’s biggest mining company, upped the ante with a 55-cents-a-share bid in July, and Noront’s board supported it. But Wyloo came back in late August, offering 70 cents a share.

“Based on an evaluation by the Special Committee and its advisors, the Noront Board of Directors has determined that Wyloo Metals’ proposal represents superior value for our shareholders,” Noront chief executive officer Alan Coutts said in a statement on Monday.

BHP now has five days to table a superior offer for Noront. If no offer is forthcoming, Noront will proceed with the Wyloo arrangement and its management and board will vote for the deal.

The scramble for Noront is all about battery metals. The Ring of Fire contains rich deposits of several minerals, including nickel. A key component in lithium ion batteries, nickel has been trading at multiyear highs recently. While more engineering and study is needed, Noront’s Eagle’s Nest project has the potential to produce high-grade nickel that could be fed into the North American electric-vehicle supply chain.

Noront shareholders have been the big winner in the tussle between Wyloo and BHP. Since May, Noront shares have soared by more than 200 per cent.

All along, Wyloo held a trump card that gave it an edge over BHP. The investment firm already controls more than 37 per cent of Noront’s shares, and said it had no intention of tendering them to BHP.

Still, over the past month, some investors had been expecting BHP to raise its bid, with Noront shares trading as much as 12 cents above Wyloo’s proposed takeover price of 70 cents. On Monday, the shares traded down by 3.6 per cent to close at 79 cents on the TSX Venture Exchange, indicating some investors still believe that BHP will come over the top.

If the Wyloo deal is successful, existing shareholders of Noront can accept cash for their stock, or hold on and own a stake in the company under new ownership. Wyloo plans to replace Noront’s current board and management, with Mr. Forrest becoming chairman. Other proposed new directors include Ian Delaney, former chief executive of Sherritt International Corp.

Located 550 kilometres northeast of Thunder Bay, in the remote James Bay Lowlands of Ontario, the Ring of Fire contains promising – but unproven – deposits of nickel, copper and chromite. Once the epicentre of a staking frenzy, Noront failed to make significant progress in developing its projects in the area over the past decade, and began to run out of money.

One of the biggest impediments to development in the Ring of Fire is a lack of basic infrastructure such as roads, electricity and high-speed internet. Noront had hoped for the provincial and federal governments to commit about $1.6-billion in capital to build an access road into the Ring of Fire, but little progress has been made. Noront’s mining camp is located in a swamp, about 300 kilometres north of the provincial highway network.

If BHP chooses to walk away, it will be entitled to a $13-million break fee. Wyloo said it will lend cash-strapped Noront $23-million, in part so the company can pay the fee.

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