Noront (TSXV:NOT) stock jumps 69% after takeover bid. Worth a buy?

Summary

  • Stocks of Canadian miner Noront Resources Ltd. (TSXV:NOT) jumped by around 69 per cent at market open on Tuesday, July 27.
  • The surge came after an Australia-based enterprise approached to buy the mining company in an all-cash deal.
  • Due to the rising demand in the electric vehicles (EV) industry, many big players are looking to acquire companies engaged in the production and development of battery metals.

Stocks of Canadian miner Noront Resources Ltd. (TSXV:NOT) jumped by around 69 per cent at market open on Tuesday, July 27.

The surge came after Australia-based BHP Western Mining Resources International Pty Ltd approached to buy the mining company for C$ 325 million in an all-cash deal.

Earlier this year, another Australian company named Wyloo Metals had expressed interest in taking over Noront.

Due to the rising demand in the electric vehicles (EV) industry, many big players are looking to acquire companies that are engaged in the production and development of battery metals. This factor could be playing a role in the growing interest in Noront Resources, as it deals in the exploration of metals like nickel, copper and vanadium.

In lithium-ion batteries, nickel acts as a key component as it allows manufacturers to reduce the use of the more expensive option of cobalt and lessen operational costs.

A Research and Markets report notes that the global nickel market registered a volume of 2.5 million tons in 2020 and is expected to record a compound annual growth rate of five per cent by 2026.

Copyright © 2021 Kalkine Media

Noront Resources Ltd. (TSXV:NOT)

Notably, Noront operates a high-grade nickel deposit known as the Eagle's Nest.

BHP's offer to buy the Canadian nickel exploration company's shares for C$ 0.55 per piece was 69 per cent higher than NOT’s last closing price of C$ 0.325 on Monday, July 26. Members of Noront’s board have recommended shareholders to accept this acquisition offer.

In May, Wyloo Metals had offered to buy Noront for a deal of C$ 0.315 per share. The takeover was ultimately not be completed.

As of December 2020, Wyloo Metals had a 23 per cent stake in the company. It reportedly wanted to acquire Noront to expand its business operations and boost its revenues.

BHP seems to be interested in the Canadian company as it has reportedly shifted its headquarters to Canada and aims to double its exploration of metals in the next five years.

Johan van Jaarsveld, BHP's Chief Development Officer, reportedly said that Noront has the potential to provide the company with a “world-class” growth option.

If and when BHP circulates the takeover bid to the shareholders of Noront, they will reportedly have a little over three months to make their decision.

Comment


Disclaimer

   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK