Cobalt 27 Capital has announced the completion of the previously announced scheme of arrangement, whereby Cobalt 27 acquired all of the issued and outstanding shares of Highlands Pacific.
The acquisition further builds on Cobalt 27’s position as a leading high-growth, diversified battery metals streaming and royalty company.
As a result of the acquisition, Cobalt 27 now holds an 8.56% joint venture interest in the producing Ramu mine (“Ramu”), a long-life, low-cost nickel-cobalt operation located near Madang on the north coast of Papua New Guinea (“PNG”). Ramu was financed, constructed and commissioned in 2012, by majority-owner and operator Metallurgical Corporation of China Limited (“MCC”), for US$2.1 billion which, at the time, was China’s largest overseas mining investment. In 2018, the Ramu mine achieved record annual production of 35,355 tonnes of nickel and 3,275 tonnes of cobalt. Following repayment of Highlands’ attributable construction and development loans, Cobalt 27’s ownership interest in the Ramu mine, and attributable nickel and cobalt production, would increase to 11.3%.
“We are very pleased to announce the closing of the Highlands acquisition and joint venture interest in the producing Ramu nickel-cobalt mine,” said Anthony Milewski, Chairman and Chief Executive Officer. “We look forward to working with owner and operator Metallurgical Corporation of China, to advance the mine to its full potential for decades to come. With the completion of this acquisition, we have significantly strengthened Cobalt 27’s asset base and are well positioned to deliver long-term shareholder value.”
Scheme of Arrangement
Under the terms of the Scheme, Cobalt 27 acquired all of the issued and outstanding ordinary shares of Highlands that it did not already own (the “Scheme Shares”) for an all-cash offer price of A$0.105 per share (the “Base Purchase Price”). In addition, if before December 31, 2019, the London Metal Exchange official closing cash settlement price for nickel is US$13,220 per tonne or higher for a period of 5 consecutive trading days, Cobalt 27 will also pay additional contingent consideration of A$0.010 per Scheme Share in cash (the “Contingent Purchase Price”). The Base Purchase Price consideration offered for all of the Scheme Shares is valued at approximately US$64 million which was funded with available cash and credit. The Contingent Purchase Price consideration of US$6 million will be held in escrow and funded with available credit. Cobalt 27 anticipates closing the PanAust buyback agreement, which results in the transfer of Highlands Frieda River joint venture interest to PanAust, shortly after closing which will result in the return of approximately US$9.4 million of the Base Purchase Price. Highlands’ common shares were suspended from trading on the Australian Securities Exchange (“ASX”) and the Port Moresby Stock Exchange (“POMSoX”) on May 3, 2019, pending removal from the official list of the ASX and POMSoX, scheduled for May 20, 2019.
Source: Company Press Release