Andrew Forrest's Wyloo Metals is sticking to its previous offer to buy Australian nickel explorer Mincor Resources (ASX: MCR), even after its target disclosed a deal with BHP Billiton (NYSE: BHP; London: BHP Billiton; Asx: BHP Billiton).
Mincor's nickel operations are concentrated in the Kambalda region of western Australia. Its Kambalda nickel operations currently include the Cassini nickel mine, an undeveloped field in the south, and its northern operations, including the Long and Otter Juan/Durkin North mines.
Mincor blends ore from its northern and southern operations to supply the blend to BHP's Kambalda nickel concentrator near here. The ore depends on product specifications, including nickel to arsenic ratios.
Last week, Mincor revealed that it had been delivering non-conforming products to BHP Billiton during the ramp-up period and therefore sought to amend the off-take terms to provide flexibility in product requirements so that it could deliver 100% to BHP Billiton. However, BHP has rejected the proposal.
As a result, Mincor decided to withdraw its guidance, citing "the uncertainty of future acceptance of any nonconforming products and the incomplete state of potential solutions."
In an update on Monday, privately held Wyloo said that in light of these developments, it had determined that the current offer price of $1.40 per share was "the best and final price and, in the absence of a competing offer, will not be increased."
At the time of Wyloo's offer, the offer represented a 35 per cent premium to the previous closing price and valued the company at A $760m on a fully diluted basis.
