Cobalt 27 Announces Friendly Acquisition of Highlands Pacific to Create a Leading High-Growth, Diversified Battery-Metals Streaming Company

Cobalt 27 Capital Corp. (“Cobalt 27”) (TSXV: KBLT) (OTCQX: CBLLF)(FRA: 27O) is pleased to announce that it has entered into a definitive scheme implementation agreement (the "Implementation Agreement") with Highlands Pacific Limited (“Highlands”) (ASX: HIG; POMSoX: HIG) dated January 1, 2019, pursuant to which Cobalt 27 will acquire all of the issued ordinary shares of Highlands that it does not own by means of a scheme of arrangement (the "Scheme") under Part XVI of the PNG Companies Act in Papua New Guinea.

Key highlights of the transaction include:
  • Creation of a leading high-growth, diversified battery metals streaming and royalty company
  • Increases exposure to a large, long-life, low-cost, high-growth nickel-cobalt mine (Ramu)
  • Expands and diversifies existing portfolio with increased nickel exposure
  • Accretive to Cobalt 27 shareholders
  • Attractive re-rating potential
  • Repayment of Ramu partner loans after closing will accelerate cash to Cobalt 27

Anthony Milewski, Chairman and CEO of Cobalt 27, stated: "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. 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."

Highlands’ key asset is its 8.56% interest in the Ramu nickel-cobalt mine (“Ramu”) located near Madang on the north coast of PNG. Following repayment of Highlands’ attributable Ramu construction and development loans, Highlands’ ownership would increase to 11.3%. Ramu is majority-owned and operated by Metallurgical Corporation of China Limited (“MCC”) which holds a 67.02% stake in MCC-JJ Mining which owns 100% of MCC Ramu NiCo Ltd. (“MCC – Ramu”), holder of an 85% joint venture interest in Ramu. The Government of PNG and local landowners (the “PNG Stakeholders”) own a 6.44% stake in Ramu, which would increase to 8.7% upon repayment of construction and development loans. The Ramu mine was financed and constructed by MCC for US$2.1 billion which, at the time, was China’s largest overseas mining investment. MCC is listed on the Hong Kong Stock Exchange and Shanghai Stock Exchange with a market capitalization of approximately US$9 billion.

As previously announced by Highlands on October 8, 2018, MCC is evaluating a potential expansion of the Ramu mine, which could cost in the order of ~US$1.5 billion. Details in respect of any potential expansion have not been finalized. Cobalt 27 would have the opportunity to participate in any potential expansion and increase its attributable production through its acquisition of Highlands pursuant to the Scheme.

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. Cobalt 27 intends to evaluate strategic alternatives with respect to these non-core assets.

About the Ramu Mine
  • Construction and commissioning of the US$2.1 billion Ramu mine was completed in 2012 by owner/operator MCC, as its cornerstone asset in a nickel-focused resource portfolio.
  • Ramu is a large scale nickel-cobalt mine with total estimated reserves of 1 billion pounds of nickel and 100 million pounds of cobalt. Management of Highlands currently estimates a mine life of 30+ years. Ramu produces approximately 3% of annual global mined cobalt as a co-product.
  • Ramu exceeded annual production projections in 2017, reporting net cash flow of US$170 million (unaudited), on production of 34,666 tonnes of contained nickel and 3,308 tonnes of contained cobalt, both in excess of nameplate capacity. 
  • Ramu is among the most efficient integrated lateritic nickel-cobalt operations in the world, ranking in the bottom half of the 2018 global nickel asset cost curve.
In addition to MCC’s investment in Ramu, a number of other prominent resource companies successfully operate in PNG and are responsible for significant and widespread investment in, and economic development of, the country in recent years. The most notable of these include Harmony Gold and Newcrest Mining’s proposed US$2.8 billion Wafi-Golpu Joint Venture copper and gold mine; Newcrest’s US$7.2 billion merger with Lihir Gold Limited in 2010; and, Barrick Gold’s US$298 million sale of 50% interest in the producing Barrick Niugini (Porgera) Gold Mine to China’s Zijin Mining Group in 2015. Additionally, oil and gas majors, ExxonMobil and France’s Total recently announced plans to invest an additional US$13 billion in LNG assets and Repsol has had upstream operations in PNG since 2015.

About Highlands Pacific
Highlands is a mining and exploration company listed on the Australian Stock Exchange and the Port Moresby Stock Exchange in PNG. Highlands’ primary assets include an 8.56% interest in the producing Ramu mine and a 20% interest in Frieda River Copper-Gold Project, both located in PNG. Highlands also holds 49% interest in a joint venture with Anglo American on the Star Mountains Copper Gold exploration project in PNG and has exploration tenements on Normanby Island (Sewa Bay).

About Cobalt 27 Capital Corp.
Cobalt 27 Capital Corp. is a leading electric metals investment vehicle offering exposure to metals integral to key technologies of the electric vehicle and battery energy storage markets. The Company has acquired a cobalt stream on Vale's world-class Voisey's Bay mine‎ beginning in 2021, including the announced underground expansion and holds one of the world’s largest stockpiles of physical cobalt. The Company also manages a portfolio of nine royalties and intends to continue to invest in a cobalt-focused portfolio of streams, royalties and direct interests in mineral properties containing cobalt

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