The world’s largest cobalt exploration company First Cobalt (ASX: FCC) just got even bigger after executing an agreement to acquire US Cobalt (TSXV: USCO) via a friendly takeover.
Under a definitive agreement, First Cobalt will acquire all of US Cobalt’s issued capital at a 61.8% premium to US Cobalt’s closing price on the 13 March and a total equity value of C$149.9 million.
Once the transaction has been finalised, First Cobalt shareholders will retain a 62.5% stake in the combined entity, with US Cobalt shareholders holding a 37.5% interest.
“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 of the Democratic Republic of Congo (DRC),” First Cobalt president and chief executive officer Trent Mell said.
First Cobalt claims the combined entity would be positioned as “leading non-DRC cobalt company” with North American assets in proximity to infrastructure and electric vehicle technology hubs in the US.
The combined company will own 100 square kilometres of tenements hosting 50 historic mines in Ontario’s known cobalt region, as well as the Iron Creek cobalt project in the US and a permitted cobalt refinery capable of producing battery-grade cobalt.
“We foresee a shortage of cobalt over the next five years. Yet, there are few companies doing significant work to identify new sources of supply,” Mr Mell said.
“US Cobalt’s Idaho project complements our Canadian cobalt camp properties, offering upside potential for shareholders of both companies,” he added.
Meanwhile, US Cobalt chief executive officer Wayne Tisdale said the takeover afforded US Cobalt shareholders the benefit of a larger cobalt company with interests in North America and the only permitted cobalt refinery in the region capable of producing battery-grade material.
The transaction remains subject to regulatory and shareholder approvals. Shareholders will be given the opportunity to vote in May, and if given the green light, the transaction is due to be finalised by the end of that month.
Shares in First Cobalt dipped almost 4% to A$1.05 after the market opened.