Trading in Cobalt Blue Holdings (ASX: COB) shares jumped more than 20% in early trade after it unveiled a deal which will provide it with a complete control over cobalt project in one of Australia’s premier mining districts.
Under the binding Heads of Agreement (HoA) with Broken Hill Prospecting (BPL) COB can acquire 100% ownership and legal title of the Broken Hill (Thackaringa) Cobalt Project.
The resolution of the HoA will result in the dissolution of the Thackaringa Joint Venture, and provide COB with full control and continuing management of the Project.
Under the terms of the Thackaringa Joint Venture (TJV), both BPL and COB have the rights to reduce their interest in the TJV via assignment.
Under the binding HOA, BPL will receive:
1. $500,000 cash;
- 9,000,000 COB fully paid ordinary shares at a deemed issue price of $0.15 per share;
2. $1,000,000 three-year Convertible Note (CN), interest of 6% per annum payable in arrears, convertible with a $0.20 conversion price, and with COB having an option for early payout; and
- $3,000,000 five-year Promissory Note (PN), interest free for years 1, 2 and 3, and interest of 6% per annum for years 4 and 5, payable in arrears. The PN is to be secured over the title to the tenements.
BPL will retain the existing exploration base and precious metal rights, as defined in the TJV, and its existing 2% Net Smelter Royalty (NSR) on all cobalt production from the Project.
The parties are working together to complete all other necessary documents.
COB told shareholders it is delighted that the parties have reached a commercial outcome that will allow the development of the Project with benefits accruing to shareholders of both companies.
The company recently joined the Future Battery Industries – Cooperative Research Centre (A Commonwealth Government initiative), where it will share a common focus on developing an Australian battery industry with a range of primary producers of lithium, cobalt and nickel.