First Cobalt (TSX-V:FCC, OTCQX:FTSSF) Corp. said it has closed its previously announced debt and equity financing for aggregate gross proceeds of approximately US$45 million.
The financing consisted of a private placement offering to United States investors of US$37.5 million principal amount of 6.95% senior secured convertible notes due December 1, 2026, led by Cantor Fitzgerald & Co. as sole placement agent; and an overnight-marketed public offering led by BMO Capital Markets (NYSE:BMO) as sole agent and bookrunner, of 38,150,000 common shares of the company at a price of C$0.25 per common share for total gross proceeds of over C$9.5 million (approximately US$7.5 million).
The notes are convertible into common shares at an initial conversion rate of 4,058.24 common shares per US$1,000 principal amount of notes, subject to certain adjustments set forth in the indenture.
READ: First Cobalt ends 2Q with working capital of $14.7M
In a statement, First Cobalt, president & CEO Trent Mell said: “With the completion of this financing, the First Cobalt project team can now accelerate long lead equipment orders for our Canadian battery materials refinery as we pursue our vision of becoming the most sustainable producer of battery materials."
“Our immediate objective is to become the only producer of battery-grade cobalt in North America by Q4 2022. Thereafter, we intend to produce nickel, cobalt, lithium and other battery materials from recycled lithium-ion batteries. Longer-term, we are pursuing the creation of a Battery Park around our low-carbon hydrometallurgical refinery, which would include nickel sulfate production from primary feeds and lithium-ion battery precursor manufacturing,” he added.
The company said it intends to use the aggregate net proceeds of the offering for capital expenditures associated with the expansion and recommissioning of its wholly-owned hydrometallurgical refinery located in Ontario, Canada, including buildings, equipment, infrastructure, and other direct costs, as well as engineering and project management costs. CIBC World Markets Inc. acted as financial advisors to the company with respect to the company’s refinery construction financing strategy.
In connection with their services, BMO received a cash fee equal to 6% of the aggregate gross cash proceeds received from the sale of the common shares under the equity offering and Cantor received a placement agent fee of 4% of the gross proceeds of the note offering.
Concurrently with the closing of the equity offering and the note offering, the termination of the company’s at-the-market offering program became effective as of September 2, 2021.
First Cobalt’s mission is to be the most sustainable producer of battery materials. In 2022, the company plans to commission North America’s only cobalt sulfate refinery, a critical asset in the development and manufacturing of batteries for electric vehicles. First Cobalt also owns the Iron Creek cobalt-copper project in Idaho, USA as well as several significant cobalt and silver properties in the Canadian Cobalt Camp.
Contact the author at jon.hopkins@proactiveinvestors.com