Pala to acquire Cobalt 27 in $501 million deal
Anthony Milewski, Chairman and CEO of Cobalt 27 Capital, at the company's cobalt warehouse in Rotterdam, The Netherlands. Photo courtesy Cobalt 27 Capital Corp.
Cobalt 27 Capital Corp. [KBLT-TSXV; CBLLF-OTCQX; 270-FSE], owner of the world’s largest stockpile of cobalt, said Tuesday June 18 that it has agreed to be acquired by Pala Investments Ltd. of Zug Switzerland in a $501 million deal.
The companies said Pala already owns 19% of Cobalt 27’s outstanding shares, and will acquire the balance for $5.75 per share, comprised of $3.57 in cash and $2.18 in shares of a newly-listed company to be named Nickel 28 Capital Corp.
Cobalt 27 has established itself as an investment vehicle that offers exposure to the metals that are key to the production of electric vehicles and battery energy storage. It recently acquired a cobalt stream on Vale‘s Voisey’s Bay nickel mine in Labrador.
The company added to its portfolio through the friendly acquisition of Australian Securities Exchange-listed Highlands Pacific Ltd., a move that Cobalt 27 said enables it to begin generating cash flow.
Highlands’ primary assets include an 8.56% stake in the producing Ramu Mine and a 20% interest in the Frieda River copper-gold project. Both are located in Papua New Guinea.
News that it has agreed to be snapped up by Pala Investments, sent Cobalt27 shares up 21% or 73 cents to $4.20 on volume of 935,054. The shares are trading in a 52-week range of $3.27 and $9.70.
“We believe this is a highly compelling offer for Cobalt 27, as the transaction provides shareholders with a large upfront premium,” said Cobalt 27 Chairman and CEO Anthony Milewski.
He was referring to the fact that Pala is prepared to pay a premium of 66% over Cobalt 27’s closing price on the TSX Venture Exchange on June 17, 2019.
“It is also clear that nickel will be an increasingly critical component of the electric battery revolution, and the creation of Nickel 28 provides shareholders with significant incremental value and continued exposure to the strong fundamentals of battery metals,” Milewski said.
Under the agreement, certain assets of Cobalt 27 will be transferred to Nickel 28, including:
An 8.56% joint venture interest in Ramu, a producing, long life, low-cost nickel-cobalt mine.
Royalites relating to the Dumont, Turnagain, Flemington, Nyngan, Triangle, Rusty Lake, Professor & Waldman, North Canol and Sunset properties.
Certain equity interests, including the 7.4% interest in Giga Metals Corp. [GIGA-TSXV]
US$5 million in cash to provide for working capital.
As a result, Nickel 28 will continue to provide shareholders with exposure to the electric vehicle market through nickel and cobalt exposure, the companies said.
Pala will retain a 4.9% interest in Nickel 28 and the current Cobalt 27 leadership team will continue as the board and management of Nickel 28.
The transaction is subject to the approval of Cobalt 27 shareholders by a two-thirds vote (and a majority vote excluding votes of Pala and certain other interested persons) at a meeting expected to be held in August, 2019.