Canada’s Cobalt 27 goes after lithium with royalty acquisition

Mt. Marion lithium project is located about 40km south west of Kalgoorlie, Western Australia and is jointly owned by Mineral Resources Limited (43.1%), Neometals Ltd 13.8%) and one of China’s largest lithium producer, Jiangxi Ganfeng Lithium Co. (43.1%).(Image courtesy of Mineral Resources.)

Canada’s Cobalt 27 Capital (TSXV: KBLT)(OTCQX: CBLLF)(FRA: 27O) is tapping into the lithium sector by acquiring a royalty of 1.5% of gross revenues and A$2 per tonne of ore mined at the Mount Marion lithium project in Western Australia, the latest in a series of major deals the company has announced in less than a year.

The move comes only days after the Toronto-based company revealed a proposed $96-million buyout of Highlands Pacific, which owns a stake in a nickel and cobalt mine in Papua New Guinea.

Cobalt 27 has been acquiring streams of battery metals from mines around the world, betting that growing sales of electric vehicles will significantly boost demand for cobalt, lithium and nickel.

Cobalt 27 will put in about $9 million into a share of production at Mineral Resources and Jiangxi Ganfeng Lithium’s major spodumene project, despite the battery mineral’s poor performance.

Until now, the company had been acquiring streams on nickel and cobalt only, betting that growing sales of electric vehicles (EV), which need both metals for its batteries, would significantly boost demand for those elements.

“We are committed to becoming a proxy for the large-scale transition to battery-based electric vehicles and energy storage systems,” Chairman and Chief Executive Officer, Anthony Milewski, said in the statement. “This transaction diversifies our portfolio of battery metals into lithium and exemplifies our core strategy of solidifying Cobalt 27 as the leading battery metals streaming and royalty company,”

Acquisition of the royalty is being largely funded by a small percentage (7%) of Cobalt 27’s existing holdings of physical cobalt, Milewski noted.

Experts expect the need for lithium from battery makers alone to jump 650% by 2027, while overall demand is forecast to rise more than threefold in the next nine years.

Prices, however, are projected to drop in the early 2020s as a result of an ever-rising number of projects expected to come online.

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