VANCOUVER — Cobalt 27 Capital‘s $200-million initial public offering (IPO) on the TSX Venture Exchange on June 23 shows there’s a growing appetite among investors for exposure to the booming demand for minerals used in the lithium-ion battery and electric vehicle industries.
Tesla broke ground on its “Gigafactory” outside Sparks, Nevada, in June 2014. It expects to begin battery-cell production by year end. Credit: Tesla Motors.
Cobalt 27 issued 22.2 million shares priced at $9 each, with the financing led by underwriters Scotiabank, Canaccord Genuity and TD Securities. Cobalt 27 shares hit an intraday high of $11 during June 26 trading before closing at $9.14 per share on June 26. The company has 24 million shares outstanding for a $216 million market capitalization.
Cobalt 27 will have two areas of focus in the niche cobalt subsector: physical supply procurement, and specialty-metal royalty and stream acquisitions.
“It is really the culmination of a few years of hard work. I started looking at battery metals and electric vehicles, and the first thing we thought of was copper and nickel, but those are big, liquid markets,” Cobalt 27 chairman and CEO Anthony Milewski says during an interview.
“We looked at graphite, as sort of a cost-plus model, and then lithium, but we arrived at cobalt. It’s obviously a by-product of nickel and copper mining, and there aren’t many big projects on the horizon. So when we explored the lithium-ion battery market, the thread that seemed to weave through it all was cobalt. I believe the penetration of electric vehicles, globally, is going to be far swifter and larger than anyone anticipates,” he continues.
Milewski also serves as a managing director at Vladimir Iorich’s Pala Investments, which ended up with a 19.46% post-IPO equity stake in Cobalt 27.
Cobalt 27 has 2,160 tonnes of physical cobalt warehoused in the United States, which would be valued at the time of writing at US$125 million based on a London Metals Exchange cobalt price of US$26.13 per lb.
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