Forrest dives into another mining merger hotspot

Greatland has other prospective targets in the region around Telfer, making it a logical acquisition target for Newcrest, and the takeover tensions were on show in August when Newcrest declined to exercise an option to pay $US60 million for a further 5 per cent of Havieron.

Cashed up Newcrest could easily afford the extra 5 per cent, but the $US60 million price tag was set by an independent valuer and loomed as a major price discovery event for Greatland had Newcrest agreed to pay it.

Wyloo agreed to pay 8.2 pence for each Greatland share; the stock was below that level for the entire period between August 30 and September 8.

Greatland shares have averaged 10.22 pence per share since July 1 and 13.45 pence per share over the past 12 months.

Greatland shareholders will need to give approval for the investment to go ahead, with the vote expected within a month.

Wyloo’s spend on Greatland may yet rise to $120 million after it received warrants granting it the option to buy more shares for 10 pence each if certain milestones are achieved.

The Wyloo investment coincided with Greatland securing a $220 million loan from ANZ, ING and HSBC on a seven-year term.

Construction of Havieron was expected to cost $529 million, with Newcrest liable for 70 per cent of that cost and Greatland responsible for 30 per cent.

Greatland chief Shaun Day said the cumulative $340 million funds injection had removed any risk that Greatland would struggle to fund its share of construction costs.

“Completing the debt facilities and Wyloo investment will enable Greatland to be fully funded for its share of costs in developing the Havieron project into first production and potential free cash flow,” he said.

Wyloo chief Luca Giacovazzi said Havieron was one of the most exciting discoveries in the Paterson province and Wyloo was also keen to get exposure to Greatland’s other targets in the region.

Unlikely to be welcomed by Newcrest

Wyloo’s likely emergence as the biggest shareholder in Greatland is unlikely to be welcomed by Newcrest, given Wyloo has a habit of complicating big miners’ attempts to acquire juniors.

Wyloo’s strong bidding for Canadian nickel explorer Noront last year eventually convinced BHP to give up its long pursuit of the junior.

Wyloo was also a stone in the shoe of IGO over the past year as it sought to acquire nickel miner Western Areas.

Wyloo conspicuously bought Western Areas shares on market at prices that were higher than the IGO offer price, fuelling expectations of a rival bid and ultimately contributing to IGO’s decision to raise its offer by 15 per cent.

Before it agreed to support IGO’s takeover bid for Western Areas, Wyloo struck a deal with IGO that will give Wyloo a stake in any future nickel refinery that IGO builds in Australia.

Wyloo last month loaned $150 million to Australian rare earths mining aspirant Hastings Technology Metals and also toyed with the idea of taking a strategic stake in sold-down gold miner Regis Resources.