Brazilian mining firm Vale has closed cobalt-streaming transactions with Wheaton Precious Metals and Cobalt 27 Capital, which are valued at $690m and involve the sale of future cobalt production from its Voisey’s Bay mine in Newfoundland and Labrador, Canada.
The transactions will allow Wheaton and Cobalt 27 to receive 75% of the cobalt stream from the Voisey’s Bay nickel mine, where cobalt is mined as a by-product.
The proceeds from the deals will be used to fund the Voisey’s Bay underground mine expansion project (VBME), which will extend the life of the mine to 2034.
Cobalt 27 chairman and CEO Anthony Milewski said: “The Voisey’s Bay Cobalt Stream is a milestone achievement in our pursuit of building the world’s premier investment vehicle to play the electric vehicle and battery energy storage revolution.
“Cobalt 27 is expecting to purchase approximately 1.6 million pounds of cobalt per year during the 2021 to 2024 ramp-up, increasing to approximately 1.9 million pounds of cobalt per year during full-scale production starting in 2025.
“We expect a stream on this world-class, low-cost, long-life asset to be rewarded in the market and build the foundation for a value re-rating of our company’s shares.”
Vale recently approved the construction of the VBME project, which is expected to cost $1.7bn for construction and commissioning works, targeting the first full year of production in 2021.
As per the transactions, Wheaton will receive 42.4% of the future cobalt production for a consideration of $390m, while Cobalt 27 will get access to 32.6% for $300m, with deliveries slated to commence from 1 January 2021.
Once Vale delivers 31 million pounds and 23.8 million pounds of cobalt to Wheaton and Cobalt 27 respectively, their entitlement will fall to 21.2% and 16.3% respectively for the life of the mine.