M2 Cobalt and Jervois Mining have announced plans to merge in order to bring together each company’s strongest assets.
A statement released on Tuesday (January 22) says the merger is friendly and at market, with Jervois planning to acquire all of M2’s shares. Through the agreement, each common share of M2 will be exchanged for one common share of Jervois, implying an offer price of C$0.262.
Once the transaction is completed, pro forma ownership of the newly formed company will be 77.9 percent existing Jervois shareholders and 22.1 percent M2 existing shareholders.
The new company’s board of directors will have three nominees from Jervois and one from M2, with Jervois’ chairman and CEO both continuing their current roles.
A meeting for M2 shareholders is set to take place sometime in Q2 2019, with those in attendance to vote on the merger. Sixty-six percent of voters must greenlight the deal for it to proceed.
While Jervois will keep its primary listing on the ASX, it is looking to enter the North American capital markets by listing on the TSX Venture Exchange. M2, which is currently listed on the TSXV, will delist its shares from the Canadian exchange after the transaction is completed to allow the newly formed company to list.
In the meantime, Jervois has given M2 a US$3-million bridge working capital loan to improve the company’s liquidity until closing.
Jervois’ primary asset is its Nico Young cobalt-nickel deposit in New South Wales, with efforts currently underway to finalize a prefeasibility study for a 3-million-tonne-per-year heap-leach facility.
Alongside Nico Young, Jervois has applied for a prospecting license over the Kabanga nickel project in Tanzania. According to the company, the merger with M2 will “complement” its East African regional ambitions as M2 is an exploration company with prospective properties in Uganda.
The company controls two projects in Uganda: Kilembe and Bujagali. The former consists of five exploration licenses that span 710 square kilometers, while the latter entails six exploration licenses across 1,705 square kilometers.
“Jervois has reviewed a significant number of investment opportunities in cobalt globally and is enthusiastic regarding the exploration potential of M2 Cobalt’s portfolio of tenements,” says the release.
“Uganda has a continuation of geological trends from neighbouring Democratic Republic of Congo, as well as a history of copper/cobalt production, but with greater political and regulatory stability.”
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.