Jervois Mining has reached an agreement with Koboltti Chemicals Holdings (KCHL) to acquire Freeport Cobalt, along with four of its affiliated entities for $160m.

The move follows the company’s green signal for $78.4m construction of Idaho cobalt operation (ICO) in the US, which is expected to start production in mid-2022.

Under the terms of the agreement, Jervois is expected to make an additional $75m payment as working capital in Freeport Cobalt, upon closing of the acquisition.

KCHL is eligible to receive contingent consideration of up to $40m, based on Freeport Cobalt’s financial performance from 2022 through 2026.

The transaction is expected to close at the end of August 2021, subject to the closing of adequate portion of the equity raising and other customary closing conditions.

Upon closing, the Australian miner is expected to become vertically integrated cobalt and nickel company. It is also anticipated to enable the company to become the second largest producer of refined cobalt outside China.

Jervois stated: “The Acquisition is expected to transform Jervois into a global, vertically integrated cobalt and nickel company of scale, led by a highly experienced management team.

“Post acquisition, Jervois will be diversified across multiple products and value chain segments with significant relevance to leading cobalt producers and end-users.”

Freeport Cobalt is a cobalt refining and specialty products business based in Kokkola, Finland, producing cobalt products since 1968.

In 2019, the refinery and battery materials operations at Freeport Cobalt were sold to Umicore, and the rest was retained by Freeport-McMoRan and other co-owners.

Freeport Cobalt holds contractual rights to around 40% of the Kokkola refinery capacity and ownership of downstream advanced materials processing capabilities.

It has a capacity sharing agreement in place with Umicore for the 15,000mtpa cobalt refinery in Kokkola, Finland, and has contractual rights to toll refine 6,250mtpa cobalt until 2093.

Jervois intends to fund the acquisition through A$313m ($230m) fully underwritten equity raising, with $40m equity investment from Mercuria.