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The Ramu nickel mine Madang office complex in Papua New Guinea. Credit: Ramu Nico Management Ltd.[/caption]
Cobalt 27 Capital has entered an agreement to acquire ASX-listed Highlands Pacific. The acquisition, valued at $96 million, will increase Cobalt 27’s exposure to nickel through the Ramu nickel-cobalt mine in Papua New Guinea. Highlands Pacific owns an 8.56% interest in the mine, which is majority owned by Metallurgical Corp. of China Ltd.
Cobalt 27 has agreed to pay A10.5¢ in cash per share for Highlands. If nickel prices meet a certain threshold before the end of 2019, an additional A1¢ per share will be paid.
Cobalt 27 and Highlands Pacific have agreed to terminate a US$113-million streaming agreement announced in May 2018.
"The acquisition of Highlands will allow Cobalt 27 to gain a direct interest in the Ramu nickel-cobalt mine and materially increase its attributable exposure to the mine's nickel production from 27.5% to 100% and cobalt production from 55% to 100%, relative to the previously announced Ramu cobalt nickel stream,” said Anthony Milewski, chairman and CEO of Cobalt 27. “It does so at nearly half the cost of the previously announced Ramu cobalt nickel stream, provides increased balance sheet flexibility, and enhances value for Cobalt 27 shareholders. It also brings cash flow to our business, something we have told our shareholders was important from the beginning."
Following repayment of Highlands' attributable Ramu construction and development loans, Highlands' ownership would increase to 11.3%.
In October, Highlands announced that MCC is evaluating a potential expansion of the Ramu mine, which could cost around US$1.5 billion. Ramu is a large scale nickel-cobalt mine with total estimated reserves of 1 billion lb. nickel and 100 million lb. cobalt.
Highlands also holds interests in the Star Mountains Copper Gold exploration project in PNG and is evaluating the Sewa Bay laterite nickel project in PNG in conjunction with Japanese trading house Sojitz Group.
For more detail on the terms of the acquisition see www.cobalt27.com