First Cobalt to divest mining assets to fund Ontario cobalt refinery restart

Pittsburgh — First Cobalt has entered into a letter of intent with Kuya Silver to sell a portion of its silver and cobalt mineral exploration assets in Ontario in order to provide capital for the upcoming recommissioning of the former's cobalt refinery, also in Ontario, both companies said Dec. 21.

First Cobalt CEO Trent Mell said the transaction allows First Cobalt to build a larger debt financing solution for the refinery in order to keep its restart on pace with growing cobalt demand.

"The electric vehicle landscape is moving quickly and proceeds from this transaction will allow us to remain on schedule, while reducing dilution," Mell said in a statement.

The agreement between First Cobalt and Kuya will be instrumental in advancing mineral exploration activities at the silver and cobalt properties, according to the statement.

"First Cobalt has spent a considerable amount of time consolidating this historic high-grade mining district and has made great strides towards reviving what was once a world class silver and cobalt mining camp," Mell said. "Kuya's leadership team has tremendous experience with high-grade silver deposits and we look forward to working with them on these coveted assets."

Kuya will obtain 100% interest in the Kerr area properties at the cobalt-silver camp in Ontario, but the company can form a joint venture with First Cobalt and earn up to 70% ownership of the remaining assets at the camp if certain conditions are met.

First Cobalt will retain a right of first offer to refine base metal concentrates from the site at its refinery and can regain rights to some of the mining assets following any discovery of a primary cobalt deposit.

The two companies plan to complete the transaction in the first quarter.