After First Cobalt Corp’s recent attempts to thwart the merger between Jervois Mining (ASX: JRV) and TSX-listed eCobalt, Jervois announced this morning that shareholders of both companies had approved the tie-up, which is now expected to be completed this week.
On Friday, 72.54% of eCobalt’s shareholders approved the merger, with Jervois holders giving the transaction the greenlight earlier in the week.
Under the merger, Jervois will acquire all the outstanding shares in eCobalt with each eCobalt ordinary share exchanged for 1.65 common Jervois shares.
The combined entity is expected to be the third largest cobalt play in the world and will have a market cap of around $100 million.
Advisory firms favour merger
Earlier last week, Jervois released recommendations from two independent proxy advisory firms which urged shareholders to vote in favour of the tie-up noting that it was in the “long-term interests” of eCobalt and its shareholders, with eCobalt in “much need” of financing to advance its flagship Idaho cobalt project in the US.
To-date eCobalt has been unsuccessful in its attempts to lock-in financing due to the weakened cobalt price.
As part of the merger terms, Jervois agreed to spend C$10 million on advancing Idaho towards completion of a feasibility study and into construction, which is expected to occur over the next 18 months.
“Management teams from both companies have already conducted extensive meetings on site to agree on the appropriate path forward [for Idaho] – to fast-track metallurgical work and discuss economic improvements to the mine plan,” eCobalt’s board told its shareholders.
First Cobalt’s attempted spanner
Prior to Friday’s meeting, First Cobalt, which owns a 5.8% stake in eCobalt had been attempting to thwart the merger by claiming shareholders would “get nothing of value in return” for giving up 53% of the company.
Both Jervois and eCobalt responded stating First Cobalt’s claims were “self-serving”, outright “false” and “misleading”.
“First Cobalt is a company with a constantly changing business plan. Its aggressive opposition to the proposed Jervois merger is a last-resort attempt to gain access to eCobalt’s superior quality asset base,” eCobalt stated in response to First Cobalt’s claims.
It was also noted that First Cobalt made a grab for eCobalt after the proposed merger was announced – securing its 5.8% stake days later.
eCobalt’s board described this grab as a “desperate” move by a company lacking in “quality assets”.
“First Cobalt’s news release fails to disclose that eCobalt has completed multiple assessments on First Cobalt’s assets and has an intimate understanding of their quality and value.”
“eCobalt previously owned Iron Creek and abandoned the property due to lack of merit and eCobalt has a clear understanding of their refinery’s economics and potential.”
The new Jervois
With both eCobalt and Jervois shareholders staunchly ignoring First Cobalt’s “desperate” attempts and the merger now approved, the transaction is expected to be completed mid-week.
According to Jervois, the combined entity has a portfolio of “strong development stage cobalt assets” as well as a global project pipeline of attractive development and exploration projects prospective for cobalt, nickel and copper.
Jervois also noted, with its recent capital raising, it has more than $16 million in cash to advance the assets.
“With our board and our contingent being largely ex-Xstrata and Glencore, we are set up to focus on getting into production, generating cashflow and differentiating ourselves in the market as fast as we can,” Jervois chief executive officer Bryce Crocker said.