Pala Investments sweetens acquisition deal for Cobalt 27 by $23m, shares up
Private Swiss firm Pala Investments and Cobalt 27 Capital (TSXV: KBLT) on Tuesday announced a $23 million boost to the previously announced 100% acquisition deal.
Pala has increased the cash consideration to C$4 per share, up from the previously reported C$3.57 — adding C$30 million ($23m) to the deal that created Nickel 28 Capital, which will retain Cobalt 27’s existing nickel focused assets.
Pala will also repay Cobalt 27’s net debt, leaving Nickel 28 with no corporate debt and funding of $5 million cash upon closing.
The amended deal gives Cobalt 27 shareholders C$5.92 per share, comprised of C$4 in cash plus one share of Nickel 28 with an implied value of C$1.92 per share.
Cobalt 27 currently owns a joint venture interest (8.56%) in Ramu, a producing nickel-cobalt mine located near Madang on the north coast of Papua New Guinea. The mine was financed, constructed and commissioned by majority-owner and operator Metallurgical Corporation of China in 2012 for $2.1 billion, which at the time was China’s largest overseas mining investment. Last year Ramu achieved production of 35,355 tonnes of nickel and 3,275 tonnes of cobalt.
Cobalt 27 also holds streams and royalties on various projects across Canada. The company previously acquired a cobalt stream on Vale’s Voisey’s Bay mine in Newfoundland and Labrador, which allows Cobalt 27 to receive 32.6% of the mine’s production beginning in 2021. The company’s royalty portfolio includes a 2% net smelter return on the Turnagain project in British Columbia, one of the largest undeveloped nickel-cobalt sulphide deposits in the world.
Shareholder Anson Funds, which had not disclosed its stake in Cobalt 27, had earlier opposed the deal, stating it ‘undervalued’ the company, Reuters reported.
“We are pleased to provide these significantly improved transaction terms to Cobalt 27 shareholders on a best and final basis,” Stephen Gill, managing partner of Pala, said. “We believe that these terms are responsive to shareholder feedback and fully value the company.”
By market close Tuesday, Cobalt 27’s shares were up 4%. Trading volume reached $1 million, over 5 times the average daily volume of 187,000. The company has a C$355 million market capitalization.