07 Dec 2020

Wyloo Metals to purchase cornerstone position in Noront Resources from Resource Capital Fund V L.P.

Wyloo Metals’ agreement to become a cornerstone investor in Noront will bolster its support of the discovery and development of new mines to supply the critical materials needed to power the decarbonisation of the global economy.

4 minute read
Ring of Fire
The entire Ring of Fire is estimated to be worth about $60 billion in deposits, including chromite, a key ingredient in stainless steel. Photo Credit: Tanya Talaga/Toronto Star via Getty Images.

Wyloo Metals Pty Ltd. (Wyloo Metals) has entered into a definitive agreement to become a cornerstone investor in Noront Resources Ltd. (Noront) through the acquisition of all beneficial interests in Noront controlled by Resource Capital Fund V L.P. and its affiliates (RCF).

The deal is Wyloo Metals’ second Canadian investment, and follows several similar strategic investments aimed at supporting the discovery and development of critical commodities required to decarbonise the global economy.

Under the terms of the deal, Wyloo Metals will acquire the following instruments held by RCF:

  • 94,553,126 Noront common shares and warrants to acquire 1,774,664 Noront common shares; 
  • US$15,000,000 convertible loan maturing September 30, 2021; and
  • A 1.0% net smelter return royalty over the Eagle’s Nest deposit.

Noront is a Canadian listed mining company with several assets, including the high-grade Eagle’s Nest nickel project in the Ring of Fire, an emerging multi-metals region located in the James Bay Lowlands of Northern Ontario.

Eagle’s Nest is the largest high-grade nickel discovery in Canada since Voisey’s Bay and is anticipated to have an initial mine life of 11 years, with the potential for an additional nine years. This excludes the development of the adjacent chromite resources, which presents a further development opportunity.

Once developed, the Ring of Fire has the potential to generate significant business and employment benefits for Ontario’s north-western region. Analysis by the Ontario Chamber of Commerce[1] shows that within the first 10 years of its development, the Ring of Fire has the potential to contribute:

  • Up to C$9.4 billion in Gross Domestic Product (GDP);
  • Up to 5,500 jobs annually; and
  • Nearly C$2.0 billion in government revenue, divided between the federal, provincial and municipal governments and First Nations communities.

In line with the potential economic importance of the Ring of Fire, the Province of Ontario has indicated it will commit up to C$1.0 billion towards infrastructure development subject to federal government support, to ensure the necessary investment to access the region will proceed. In March 2020, the government of Ontario, Marten Falls First Nation and Webequie First Nation announced a new partnership to advance the planning and development of a proposed Northern Road Link that would provide reliable, all-season road access to potential mine sites and connect First Nation communities to Ontario’s provincial highway network.

Head of Wyloo Metals, Luca Giacovazzi, said the partnership with Noront presents a unique opportunity to join forces with a proven management team in the development of the Eagle’s Nest deposit and the continued exploration of the world-class Ring of Fire region.

“This investment reflects a long-term and collaborative strategy to support the discovery and development of the next generation of mines required to meet the growing demand of critical materials needed to power the decarbonisation of the global economy,” Mr Giacovazzi said.

“At the centre of our approach is a belief that by building strong businesses, we can create economic opportunities that enable communities to thrive. We look forward to forming a long-term working relationship with the Noront team and key stakeholders as we advance the assets over the coming years.”

Noront President and CEO Alan Coutts said: “We’re extremely pleased that Wyloo Metals has chosen to make a cornerstone investment in Noront. They are known for making long-term, strategic investments in companies that mine responsibly, and that is a philosophy that aligns very well with the approach we are taking as we develop the Ring of Fire in an environmentally responsible manner in collaboration with our First Nation partners.”

Under the terms of its agreements with RCF, Wyloo Metals will purchase the 94,553,126 Noront common shares for an aggregate purchase price of US$11.5 million (C$14.8 million, or C$0.16 per share) and will purchase the convertible loan for US$15.0 million (which is the principal amount of the loan). The Noront common shares to be acquired represent approximately 22.65 per cent of the 417,512,534 currently outstanding Noront common shares. Based on the current conversion price of the loan, Wyloo Metals would acquire 96,600,000 Noront common shares upon full conversion of the loan and would, if the warrants it is to acquire were also exercised, result in Wyloo Metals holding 192,927,790 Noront common shares, representing approximately 37.4 per cent of the Noront common shares on a partially diluted basis.

As part of the proposed transaction, Noront will grant to Wyloo Metals investor rights consistent with the rights currently held by RCF (including pre-emptive rights and rights to two board nominees).

This acquisition by Wyloo Metals is for investment purposes. Wyloo Metals does not have any current plans or intentions to buy or sell further Noront shares (other than potentially exercising its loan conversion or warrant exercise rights), to solicit proxies or to otherwise participate in any significant transaction involving Noront. Wyloo Metals will review its investment on a continuing basis. Depending on various factors, it may in the future purchase or sell securities or engage in other activities relating to Noront.

Closing of the transactions is subject to customary closing conditions, including approval of the TSX Venture Exchange.

Wyloo Metals will be filing an early warning report under Noront’s profile on SEDAR, and copies of the report may be obtained at sedar.com.

The acquisitions of these securities from RCF is to be made in reliance upon the “private agreement” exemption from the formal take-over bid requirements of applicable Canadian securities legislation. The per share price to be paid by Wyloo Metals is less than the market price of the Noront common shares as determined in the manner prescribed by applicable Canadian securities legislation

To discover more about Wyloo Metals, click here.

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