Cobalt 27 Capital will acquire a cobalt-nickel stream in the producing Ramu nickel project in Papua New Guinea (PNG) from Australia-based resources company Highlands Pacific for $113m.

In this regard, the Canadian minerals company’s wholly-owned subsidiary Electric Metals Streaming has signed a metal purchase and sale agreement (MPA) with Ramu Nickel (RNL), which is a wholly owned subsidiary of Highlands.

Highlands, currently holds a stake of 8.56% in the Ramu mine, which is located near Madang on the north coast of PNG. Other partners of the mine are the PNG Government and Landowners (6.44%) and MCC Ramu Nico (85%), which is its operator.

Cobalt 27 Capital chairman Anthony Milewski said: “Ramu is a large world-class, high-margin and long-life asset which we view as the ideal candidate for our inaugural stream. We believe the exposure to both cobalt and nickel, another key battery metal, will yield significant returns to our investors as electric vehicles begin to change our society in the coming years.

“Our partnership with Highlands will help Cobalt 27 continue to grow its position as the leader in battery metal streaming.”

Through the transaction with Cobalt 27, Highlands will utilize the cash proceeds to increase its stake in the Ramu mine to 11.3% by repaying its share of outstanding construction and development loans associated with the mine.

As per the terms of the deal, Cobalt 27 will acquire the rights to buy 55% of RNL’s attributable share of the payable cobalt metal and 27.5% of its share of the payable nickel metal from the Ramu mine throughout the lifetime of the cobalt-nickel mine.

Additionally, Electric Metals Streaming will make current payments of $4.00 per pound of payable cobalt and $1.00 per pound of payable nickel, each depending on annual inflation adjustments starting from 30 June, 2023.

Cobalt 27 said that in connection with the cobalt nickel stream it will be buying from the Ramu mine, it will also make an equity investment in Highlands to acquire a stake of 13% in the Australian firm.

The Canadian firm also revealed that is into advanced talks with two local PNG stakeholders of the Ramu mine to negotiate a $87m stream agreement on similar terms as the MPA made with Highlands.

The completion of the MPA and the equity investment in Highlands are subject to meeting of certain conditions including receipt of necessary approvals.