Pala offers to acquire battery metals company Cobalt 27

SMM6, 19 / PRNewswire-Asianet /-Cobalt Capital and Pala Investments are pleased to announce that they have reached an agreement under which Pala will receive 100 per cent of Cobalt 27 common shares. With the exception of Cobalt 27, the total consideration for each common share held is C $5.75, including C $3.57 in cash and C $2.18 in nickel 28 Capital AG shares. This represents a premium of about 66 per cent to 46 per cent over the closing price of Cobalt 27 on TSX-V on June 17, 2019, and the 20-day VWAP premium of about 66 per cent and 46 per cent.

Pala's acquisition of Cobalt 27 will retain the cobalt flow of physical cobalt and Voisey Bay, and the remaining assets will be split into nickel 28, including an 8.56 per cent joint venture interest in the Ramu nickel-cobalt mine, Dumont royalties and other assets (Turnagain, Nyngan, Flemington, Triangle, Rustee Lake, Professor and Waldman, North Canore and Sunset property royalties and other assets. The equity positions of Giga Metals and Minerva Information, as well as $5 million in cash, plus $6 million previously contributed by Cobalt 27 in escrow, to meet certain contingent payment obligations in connection with the acquisition of Highland Pacific Limited. Pala will have a 4.9 per cent interest in nickel 28.

The transaction is subject to approval by all voting shareholders of Cobalt 27 and by a majority, excluding Pala and certain interested persons, the board of directors and senior staff of Cobalt 27 holding a total of about 2 per cent of Cobalt 27 common shares, subject to customary voting and support agreements. Pala has authorized and accepted financing commitments from Industrial Bank and ING Capital Co., Ltd., as co-lead arrangers for transaction-related loans, free from financing conditions. The deadline for cobalt 27 shareholders to vote and trade is August 2019.

Through the Ni-Co note, the Ni-28 stock consideration provides shareholders with continuous upward access to the electric vehicle market (Ramu is a large operating nickel-cobalt mine with long life, low cost and high growth potential), Total estimates Ramu reserves at more than 1 billion pounds of nickel and 100 million pounds of cobalt, and management estimates a mining life of more than 30 years. Ramu consistently ranks first or second in the global nickel cash cost curve, with significant potential growth coming from 11 existing combinations of royalties focused on battery metals. These include: world-class royalties, the Dumont nickel-cobalt project in place in Canada, and royalties for Turnagain, one of the largest undeveloped nickel sulfide projects in the world.

Nickel 28 is managed by an experienced team

Nickel 28 will have a well-funded capital structure and a strong balance sheet. Pala will set up Ni 28 with $5 million in cash and will have no corporate debt at the beginning of its inception. Nickel 28 will be led and managed by an experienced and high-quality executive team of Cobalt 27. The establishment of the new company will be supported by the board of directors and management, and the proposed transaction will be unanimously supported by the Special Committee of the Board of Directors of Cobalt 27. From a financial point of view, a fair opinion indicates that the offer provided by the Special Committee and the independent financial adviser of Cobalt 27 is fair to the shareholders of Cobalt 27 (except Pala).

Overview of Ni 28 Company and Ramu Mining Industry

Nickel 28, which provides a vehicle-focused nickel, a metal content increase linked to the electric vehicle and energy storage industries, is expected to benefit from Ramu JV interest cash flows, while identifying additional value-added flows and royalties, nickel 28 will be led and managed by an experienced, high-quality executive team of Cobalt 27.

Ramu is an open-pit cobalt mine located on the Bismark Sea in Madang Province, Papua New Guinea ("PNG"). In 2017, Papua New Guinea had a total population of 8.3 million pounds and a total GDP of US $21 billion. Ramu was completed in 2008. it went into production in 2012 with an investment of US $2.1 billion. Ramu is a joint venture. The partners are China Metallurgical Group Co., Ltd. (operator, majority owner), Cobalt 27 (8.56% ownership will be transferred to Ni 28), Papua New Guinea Government and local landowners (6.44% ownership). MCC is evaluating potential expansion plans for the Ramu mine, which could cost as much as $1.5 billion, while Ni-28 is likely to participate in any potential expansion and increase its attributable production, while Ramu's annual production hit an all-time high in 2018. 35355 tons of nickel and 3275 tons of cobalt (concentrate) were produced, 76 metric tons of mineral resources were measured, 60 metric tons of approximately 0.9 per cent nickel and 0.1 per cent cobalt, mineral reserves: 56 metric tons of approximately 0.9 per cent nickel and 0.1 per cent cobalt, nickel and cobalt production increased more than sixfold between 2012 and 2018.

As part of the Highlands deal, Cobalt 27 indirectly acquired Highlands's interest in the Ramu mine, holding a total contingent consideration of $6 million in custody for five consecutive trading days, and Cobalt 27 will complete the transaction if nickel closes at $13220 or more on the London Metal Exchange on December 31, 2019. If the threshold is not reached, the nickel 28 will receive contingent consideration from the trusteeship.

SMM expects that the global cobalt and lithium raw materials are still in a state of persistent surplus from 2019 to 2021, but the heat of investment in metal raw materials inside and outside the industrial chain is still unabated, and it is optimistic about the new energy automobile industry for a long time. The injection of a large amount of investment will help the industrial chain to explore low-cost and high-quality resources, reduce the long-term cost-price curve, and promote the promotion and development of electric vehicles.

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