Swiss mining private equity firm Pala Investments has invested about $41 million in Cobalt 27 Capital Corp (TSX-V: KBLT), a Toronto investor in cobalt, a key element in electric vehicle and battery energy storage technologies. The investment, made as part of Cobalt 27’s $200 million initial public offering, increases Pala’s existing stake to about 19.46 percent of issued and outstanding common shares. Reuters recently reported that Cobalt 27’s IPO highlights the “burgeoning market for cobalt as the car industry’s push toward electric vehicles gathers pace.” Cobalt 27 is led by Chairman and CEO Anthony Milewski, a Pala managing director.
Pala Completes Investment in Cobalt 27
TORONTO, ONTARIO–(Marketwired – June 26, 2017) – Pala Investments Limited (“Pala”), a multi-strategy investment company focused on the mining and metals value chain, is pleased to announce the closing of its investment in Cobalt 27 Capital Corp. (TSX VENTURE:KBLT) (“Cobalt 27”) in connection with Cobalt 27’s public offering (the “Offering”) of 22,222,225 common shares in the capital of Cobalt 27 (“Common Shares”) on June 23, 2017.
Pala has a track record of successfully investing across a range of businesses providing raw materials to the battery and renewable energy sectors, including its investments in cobalt, lithium, rare earth elements, tin, nickel, copper and processing businesses.
Pala’s thematic view on the electrification of the global vehicle fleet as part of a broader shift of reducing carbon intensity in the global energy mix and industrial economy enabled Pala, along with other key shareholders of Cobalt 27, to be an early mover in building cobalt exposure. Pala continues to apply the same thematic approach to identifying structural trends in raw materials value chains across its investments.
The launching of Cobalt 27 provides investors with liquid and clean exposure to the exceptional underlying cobalt fundamentals, and ongoing business growth through the addition of further streams and royalties.
Commenting on the transaction, Stephen Gill, Pala Manager Partner, said: “I am delighted to see the successful listing of Cobalt 27 and the creation of a public company which provides investors with high-quality exposure to cobalt fundamentals, and, importantly, the creation of a platform that can provide leverage to the raw materials needed to support the development of the battery and new energy sectors. This investment is in-keeping with our strategy of investing in businesses and creating investment platforms focused on the raw materials value chains that support the changing global economy. I look forward to continuing to support the company in building out this platform and seeing the company grow.”
Anthony Milewski, Chairman and CEO of Cobalt 27 and Pala Managing Director, also said: “I am excited to see the launch of Cobalt 27, which represents the largest public offering in the Canadian mining industry since 2012. The outlook for cobalt remains extremely attractive, with increasing supply deficits and a growing market realization of the increasing rate of electric vehicle and energy storage systems penetration. Cobalt 27 provides the only source of liquid, pure-play cobalt exposure to investors. The company is grateful for the support of cornerstone shareholders such as Pala, and their continued support as we go forward to execute on an exciting pipeline of follow-on streaming deals for Cobalt 27.”
Details of Offering and Pala’s Investment
In connection with the Offering, Pala has acquired 4,556,908 Common Shares for aggregate consideration of $41,012,172. The Offering consisted of 10,924,420 Common Shares issued for cash proceeds of $9.00 per Common Share (the “Cash Offering”) and 11,297,805 Common Shares, valued at $9.00 per Common Share, issued in exchange for physical cobalt (the “Cobalt Offering”). As part of the Cash Offering, Pala subscribed for 2,270,000 Common Shares, for aggregate cash consideration of $20,430,000. As part of the Cobalt Offering, Pala acquired 2,286,908 Common Shares which were issued as consideration for the sale of 626 metric tons of physical cobalt pursuant to the exercise by Cobalt 27 on June 16, 2017 of a cobalt option agreement between Pala and Cobalt 27 dated May 8, 2017.
Prior to the completion of the Offering, but following a 20:1 share consolidation, Pala owned or controlled, directly or indirectly, a total of 90,000 Common Shares, representing 5.42% of the issued and outstanding Common Shares (based on 1,659,169 Common Shares outstanding on a post-consolidation, pre-Offering basis). After the closing of the Offering, Pala owns or controls 4,646,908 Common Shares in the aggregate. Based on 23,881,394 Common Shares outstanding following the closing of the Offering, Pala holds approximately 19.46% of the issued and outstanding Common Shares; an increase in its securityholding percentage of 14.04%.
Pala has acquired these securities for investment purposes and may increase or decrease the investment in the securities of Cobalt 27 depending on its evaluation of the business, prospects and financial condition of Cobalt 27, the market for Cobalt 27’s securities, general economic conditions and other factors.
Pala’s address is 12 Castle Street, St. Helier, Jersey JE2 3RT. For further information please refer to the Early Warning Report posted on SEDAR or contact John Nagulendran at +41 41 560 9070.
Pala is an investment company focused exclusively on the mining sector with a strong track record of successful investments and value creation. Pala’s team has extensive experience within the sector and seeks to assist companies in which it has long-term shareholdings by providing strategic advice and innovative solutions in development, production, turnaround and advanced exploration situations. Pala invests across all geographies and in all mining commodities as well as mining services and consumables. For more information, visit www.pala.com.
+41 41 560 9070
Photo courtesy of Cobalt 27 Capital Corp