On August 21, 2017, CobalTech and First Cobalt Corp. announced that, following the signing of a binding letter of intent June 23, 2017, they have entered into a definitive merger agreement pursuant to which First Cobalt Corp. has agreed to acquire all of the issued and outstanding common shares of CobalTech by way of a court approved plan of arrangement. Under the terms of the planned arrangement, CobalTech shareholders will receive 0.2632 of a First Cobalt common share representing the equivalent of $0.20 per CobalTech share. The combined company should have greater liquidity, a larger capital markets profile and increased access to capital. First Cobalt has assets in the Cobalt, Ontario mining camp and in the Congo. Completion of the arrangement is subject to a number of conditions, including approval by the shareholders of CobalTech and receipt of all required regulatory approvals including the approval of the TSXV. The arrangement can not close until these conditions are satisfied and the required approvals are obtained.
Cobalt is an essential element of the green revolution and its reliance on clean energy production and battery storage. It is a mineral used in the production of lithium ion batteries, mobile phone batteries, toys and laptops.
Its main use is in the lithium ion battery, which is made up of Lithium (Li) Cobalt (Co) and Oxide (Ox).
The lithium ion battery is one of the most efficient batteries being produced. Cobalt is an essential element due to its high energy density. Cobalt usage in lithium ion batteries is generally around 60%.
The battery industry currently uses 42% of global cobalt production.
58% is used in diverse industrial and military applications such as alloys and coatings.
An estimated 60% of the world’s cobalt supply comes from the Congo, an area that has been designated a conflict zone infamous for poor working conditions. The Chinese already control most of the supply from the Congo and the cobalt produced there goes directly to China.
Cobalt is produced as a by-product of nickel and copper mining. Most of these mines are being put on care and maintenance due to low nickel and copper prices.
At the same time cobalt usage is projected to dramatically increase.
Tesla has publicly stated that the cobalt it uses in the future will be sourced exclusively in North America. There is increasing pressure on other electric car manufacturers such as Ford, Nissan, Chevrolet and Volkswagen to use only ethically sourced cobalt. Electronics companies such as Apple are also increasingly being asked about the source of their cobalt.
Canada and the United States currently produce only around 5,000 tons of cobalt annually. 7,800 tons would be needed for 500,000 Model 3 Teslas. That is only one model from one manufacturer.
Tesla has become the world’s largest battery company and it is committed to the lithium ion battery. It is working with solar and wind companies to use larger lithium ion batteries to store power. This will only increase the demand for cobalt, especially North American cobalt.
The town of Cobalt, Ontario is one of the very few North American areas where cobalt can be found. CobalTech’s properties are in the heart of the Cobalt mining district.