Dual-listed First Cobalt Corp has agreed to a “friendly acquisition” of US Cobalt in an all-share deal valued at $C149.9 million ($147 million).
First Cobalt, which is listed on the Australian and Toronto exchanges, plans to use the acquisition to tap into surging demand for cobalt as a key ingredient in the manufacture of electric cars.
The Canadian company believes the deal strategically positions it as a leading non-Democratic Republic of the Congo (DRC) cobalt company. The combined company will own North American projects close to infrastructure, as well as electric vehicle and technology hubs in Michigan and California.
First Cobalt chief executive Trent Mell said the company foresees a shortage of cobalt over the next five years.
“Yet there are few companies doing significant work to identify new sources of supply,” Mell said.
“This transaction creates a larger platform to discover and develop cobalt projects for the growing electric vehicle market by combining high-quality North American assets in two of the best cobalt jurisdictions outside the DRC.”
Cobalt prices increased by 130 per cent in 2017 and have continued to rise during the first quarter of this year.
US Cobalt CEO Wayne Tisdale described the combined entity as a pure-play cobalt company with a proven and experienced management team.
“We look forward to advancing our original vision that demand for ethically-sourced cobalt is just beginning,” Tisdale said.
The deal will see all US Cobalt shares exchanged for First Cobalt shares at a ratio of 1.5 First Cobalt shares for each US Cobalt share.