Jervois Global closes US$192 million Freeport Cobalt acquisition
Jervois Global Ltd. [JRV-TSXV, ASX; JRVMF-OTCQB], formerly Jervois Mining Ltd., has closed its previously announced acquisition of 100% of Freeport Cobalt by purchasing all the shares of Freeport Cobalt Oy and four affiliated entities from Koboltti Chemicals Holdings Ltd. (KCHL).
Jervois closed the US$160 million acquisition of Freeport Cobalt with the final purchase price, including working capital but excluding cash, being approximately US$192 million to reflect higher cobalt inventory acquired. The acquisition aims to consolidate the transformation of Jervois into a global, vertically integrated cobalt and nickel company of scale.
Jervois has purchased an operating global leader in the cobalt industry, with an established market platform that is diversified by product and value chain segment. A A$313 million equity financing closed with final settlement of the A$177 million retail entitlement offer tranche, fully underwritten by UBS and Jefferies. AustralianSuper invested a further A$73.9 million and Mercuria, one of the world’s largest energy and commodity traders, invested A$45.7 million. Jervois drectors and management subscribed for an additional A$3.57 million to support the transaction.
The acquisition has the potential to transform Jervois into the second largest producer of refined cobalt outside China, building on existing assets of Jervois’ Idaho Cobalt Operations (ICO) in the United States, expected to come into production from mid-2022, and the Sao Miguel Paulista (SMP) nickel and cobalt refinery in Sao Paulo, Brazil which Jervois has agreed to acquire.
The acquisition is expected to transform Jervois into a global, vertically integrated cobalt and nickel company of scale, led by a highly experienced management team. Jervois is diversified across multiple products and value chain segments with significant relevance to leading cobalt producers and end-users.
Jervois’ acquisition of Freeport Cobalt also provides the company with an established global market platform from which to operate. The industrial logic and strategic rationale for the acquisition is compelling, with value for Jervois shareholders expected to be created through technical and commercial synergies with ICO and SMP operations.
On 30 August 2021, Jervois announced the successful completion of the retail component of its underwritten 1 for 1.56 accelerated non-renounceable entitlement offer of new fully paid ordinary shares announced to ASX on Tuesday, July 27, 2021.
The Retail Entitlement Offer closed at 5:00 pm (Sydney time) on Wednesday, August 25, 2021 and raised a total of approximately A$178 million at A$0.44 per New Share. Together with the institutional placement and institutional component of the entitlement offer, Jervois issued a total of 711,429,832 New Shares at the Offer Price for aggregate gross proceeds of approximately A$313 million.
It is intended that proceeds from the Offer will be used to fund the acquisition of Freeport Cobalt, for ICO development expenditure and for general corporate purposes, including advancement of feasibility studies at the SMP nickel cobalt refinery in Brazil.
Jervois insiders and principals have contributed A$3.57 million to the Offer, which includes A$1.0 million from David Issroff, who Jervois has proposed to appoint to its board following completion of its acquisition of Freeport Cobalt.
Through a joint venture, Freeport-McMoRan Inc. [FCX-NYSE], Lundin Mining Corp. [LUN-TSX; LUNMF-OTC; LUMI-Sweden] and La Gènèrale des Carrières et des Mines (Gècamines) formed Freeport Cobalt.
Insider participants are listed in the company’s press release. Jervois Global has 1,109,877,662 shares outstanding.