TORONTO, March 14 (Reuters) - Canada’s First Cobalt Corp on Wednesday announced a friendly takeover of US Cobalt Inc aimed at expanding its North American assets and accelerating its push to supply batteries for electric vehicles.
Ontario-focused First Cobalt said the equity deal is valued at approximately C$149.9 million ($115.74 million), representing a 61.8 percent premium to US Cobalt’s closing stock price on Tuesday.
Under the agreement, First Cobalt will add US Cobalt’s exploration properties in Idaho and Utah to the 50 historic mining properties it controls in Cobalt, Ontario, alongside a mill and permitted cobalt refinery.
Neither company is mining cobalt yet, but both are exploring deposits of the key mineral.
“We foresee a shortage of cobalt over the next five years, yet there are few companies doing significant work to identify new sources of supply,” First Cobalt Chief Executive Trent Mell said in a statement.
“This transaction creates a larger platform to discover and develop cobalt projects for the growing electric vehicle market by combining high-quality North American assets in two of the best cobalt jurisdictions outside the DRC (Democratic Republic of Congo).”
Some two-thirds of the world’s cobalt is produced in the Congo, where Amnesty International has identified mines using child labor.
Prices for cobalt, a key ingredient in lithium-ion batteries for electric vehicles, have spiked 60 percent over the past 12 months amid forecasts that demand will double in the next decade as consumers switch to less-polluting cars.
Nearly all cobalt, which prolongs battery life, is mined as a byproduct of copper and nickel, making it difficult for miners to increase output. ($1 = 1.2952 Canadian dollars) (Reporting by Susan Taylor; editing by Jonathan Oatis)