The merger, valued at approximately C$59.9 million, will see the companies combine their US and Australian assets.
Australian miner Jervois Mining (ASX:JRV) and Idaho-focused eCobalt Solutions (TSX:ECS,OTCQX:ECSIF) are set to combine to become a leading company in the cobalt space, as the need for the battery metal used to power electric cars continues to increase.
The merger, valued at approximately C$59.9 million, will see Jervois acquire all of the issued and outstanding common shares of eCobalt that the miner does not already own.
The share exchange ratio will be 1.65 of a Jervois share per eCobalt share, with an implied offer price of C$0.36 based on Jervois’ closing price on Friday (March 29) — a 5.8 percent premium to eCobalt’s closing price the same day.
Jervois and eCobalt’s merger news comes at a time when battery and electric car makers continue to face challenges surrounding the security and transparency of cobalt supply.
Cobalt, an essential element in lithium-ion batteries, is primarily mined in the Democratic Republic of Congo, a country where mining has often been linked to child labor and human rights abuses.
The new Jervois company will offer geographic and asset diversification to investors as it will combine eCobalt’s fully environmentally permitted Idaho Cobalt Project (ICP), located in the US, and Jervois’ current flagship asset, Australia’s Nico Young cobalt-nickel deposit.
eCobalt’s ICP is located in the heart of the Idaho Cobalt Belt, with a resource of 45.7 million pounds of cobalt at 0.59 percent cobalt in the measured and indicated categories. Currently, a new feasibility study is underway to evaluate increasing the throughput rate from 800 tonnes per day to 1,200 tonnes per day at the future mine.
Meanwhile, Jervois is working on an economic study at its Nico Young project based on a JORC-compliant inferred mineral resource of 167.8 million tonnes at 0.59 percent nickel and 0.06 percent cobalt. A prefeasibility study is expected to be completed in the first half of the year.
In January, Jervois announced the friendly acquisition of M2 Cobalt (TSXV:MC), which has assets in Uganda including the Bujagali project and the Kilembe project, the latter of which is located near the historic Kilembe mine.
“The combination with eCobalt advances our combined goal of building the pre-eminent, mid-tier, multi-jurisdictional battery materials supplier and secures one of the highest quality cobalt deposits globally,” Simon Clarke, CEO of M2 Cobalt, said.
The new company will be listed on the Australian Stock Exchange and will seek a listing on the TSX Venture Exchange as well. The transaction is pending customary regulatory approvals, court approvals and closing conditions.
On Monday (April 1), shares of eCobalt were down 4.41 percent, closing at C$0.32 in Toronto. Shares of Jervois Mining were trading at AU$0.23 on Friday before they were placed in a trading halt pending the merger news.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: eCobalt Solutions is a client of the Investing News Network. This article is not paid-for content.