ASX-listed cobalt developer Jervois Mining has signed a definitive agreement to acquire M2 Cobalt, a Canada-based cobalt explorer with operations in Uganda.
Under the terms of the deal, Jervois is providing one share for every share in M2 Cobalt. The deal takes the Canadian company’s value to $12.5m, a 4.5% premium at present share prices, reported Reuters.
An exploration stage company, TSX Venture Exchange-listed M2 Cobalt has 100% ownership in prospective properties in Uganda.
The company boasts of having a strong operating presence in Uganda alongside strong relationships with local government and stakeholders. Its projects are at target drilling stage and indicate strong anomalies.
M2 Cobalt’s Kilembe-area properties have five exploration licenses covering 710km², along the historic Falconbridge mine.
Falconbridge, the Canadian base metal company that was acquired by Xstrata in 2006, divested the mine to the Ugandan government due to political instability in the 1970s and the operation has since been closed.
The Kilembe mine operated for over two decades, producing over 16 million tonnes of ore with grading of 1.98% Cu and 0.17% Co between 1956 and 1977.
M2 Cobalt also controls the Bujagali project, which consists of six exploration licenses in south central region of Uganda covering 1,705km.
According to Jervois, the deal will complement its efforts to boost its presence in East Africa.
M2 shareholders are expected to represent around 22% of the merged entity.
Jervois, which has applied for a prospecting licence in Tanzania, expects to continue M2’s listing on TSXVE, which will enable it gain access to capital markets of North America.
The firm is currently developing the Nico Young cobalt-nickel deposit in New South Wales of Australia.
Jervois CEO Bryce Crocker and chairman Peter Johnston, both of whom are former executives of Glencore, will continue in their current positions.
Following the transaction, the board of directors will consist of three nominees from Jervois and one from M2 Cobalt.