Global Cobalt Enters Lock Up Agreement with IMHL to Support Spin-Out

Global Cobalt Corp. (TSXV:GCO) entered into a binding agreement with largest shareholder Imperial Mining Holding Limited, for a lock up agreement and spin-out of certain North American mineral exploration projects to SpinCo, a newly incorporated company. However, as a condition of the terms, IMHL and its affiliates agreed to waive their rights to receive common shares, warrants and/or options in SpinCo. Global Cobalt’s Werner Lake property in Ontario and the Iron Creek property in Idaho will be transferred to SpinCo. The Karakul and Altai Sister properties in Altai Republic, Russia will be retained by Global Cobalt.

As quoted in the press release:

Global Cobalt and IMHL have entered into a binding agreement (the 
Agreement”) in respect to terms of the proposed spin-out by Global Cobalt of its North American mineral exploration properties to a new company focused on M&A and project development in battery metals projects. As a condition of the terms, IMHL and its affiliates have agreed to waive their rights to receive common shares, warrants and/or options in SpinCo.

Erin Chutter commented:
“We are pleased that IMHL has agreed to endorse and vote in favour of the Plan of Arrangement. This support brings us one step closer to achieving our vision of creating a strong and viable global energy metals focused company for our shareholders, partners and investment community, while continuing to provide exposure to the Karakul and Satellite projects for shareholders.”

Highlights of the Agreement include:

Holders of Global Cobalt common shares on the effective date of the Transaction (the “Effective Date”), other than those held directly and indirectly by IMHL, will be entitled to received one SpinCo Share for each common share of Global Cobalt held on the Effective Date;

Holders of outstanding Global Cobalt options and warrants immediately prior to the Effective Date, other than those held directly or indirectly by IMHL, will be granted the right to receive a corresponding number of options and warrants to acquire SpinCo Shares on the same terms and conditions of the Global Cobalt options and warrants, save and except as otherwise agreed to by Global Cobalt and the holders thereof or as required by the TSX-V;

Global Cobalt’s Werner Lake property (the “Ontario Property”) and the Iron Creek property (the “Idaho Property”) and associated technical data will be transferred to SpinCo in consideration for common shares of SpinCo (each a “SpinCo Share”) having a market value equal to the aggregate value of the Ontario Property and the Idaho Property;

The Karakul and Altai Sister properties, located in Altai Republic, Russia (the “Russian Properties”) and all associated technical data will be retained by Global Cobalt;

Upon the approval of the Transaction, Global Cobalt shareholders will be asked to vote to allow for the conversion of the loan by IMHL to Global Cobalt dated July 8th, 2013 (the “IMHL Loan”) into common shares of Global Cobalt

Global Cobalt will assign and transfer to SpinCo, and SpinCo will accept, certain obligations and liabilities. Details of the obligations and liabilities will be outlined in the information circular that will be sent to shareholders; and

Global Cobalt will, as a condition of closing the Transaction, acquire a significant interest in a qualifying mineral property (the “Qualifying Property”) that meets the TSX-V initial listing requirements for a Tier II mining issuer and obtain a NI 43-101 compliant technical report thereon should Karakul not meet these requirements.

The strategic reorganization remains conditional on the approval of final documentation by the Board of Directors of Global Cobalt, approval of the strategic reorganization by the TSX Venture Exchange, approval of shareholders of Global Cobalt, and approval of the Supreme Court of British Columbia, among other things.

As previously announced, a shareholders’ meeting to consider and vote on the Plan of Arrangement amongst other matters will be held on June 11th, 2015. Additional details of the spin-out transaction will be included in an information circular to be mailed to shareholders of Global Cobalt in connection with the Company’s shareholders meeting referred to above.

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