TORONTO, March 26, 2021 /CNW/ - First Cobalt
Corp. (TSXV: FCC); (OTCQX: FTSSF) (the "Company") today
announced that it has entered into a loan amendment agreement with
Glencore AG on March 25, 2021 to
repay an existing loan of approximately US$5.5 million of debt by issuing common shares
of the Company. The common shares to be issued to Glencore in
connection with the repayment of the loan represents approximately
4.8% of the current outstanding shares of First Cobalt.
In August 2019, First Cobalt
entered into a loan agreement with Glencore to fund engineering
studies, metallurgical testwork and permitting activities for an
expansion of the Company's refinery in Ontario, Canada to produce battery grade
cobalt sulfate. The loan bears interest at LIBOR plus 5%, with all
accrued interest having been capitalized to date. The loan
agreement includes a right (the "conversion right") for Glencore to
convert all or a portion of the balance owing into common shares at
a discount of 15% of the "market price" of the common shares
(determined with reference to the policies of the TSX Venture
Exchange) on the maturity date of August
23, 2022. The loan agreement provides the Company with
the right to prepay the loan prior to maturity. The amendments
expressly permit First Cobalt to repay the loan by issuing common
shares on broadly similar terms to the conversion right.
Specifically, under the terms of today's amending agreement, the
Company and Glencore have agreed to expressly allow the Company to
voluntarily repay all amounts outstanding through the issuance of
common shares. Accordingly, the Company and Glencore have agreed
that, subject to the terms of the amended loan agreement, the
Company may repay the loan representing an outstanding debt of
US$5,505,830 by issuing 23,849,737
common shares at a deemed price of $0.29 per share and the Company has provided
Glencore with notice that, subject to the terms of the amended loan
agreement, the Company intends to repay all such amounts
outstanding under the loan by issuing common shares.
The deemed price per common share represents a 15% discount to
the closing trading price of the common shares on the TSXV on
March 24, 2021, the trading date
immediately prior to the agreement date. The U.S. dollar
denominated debt was converted from United States dollars into Canadian dollars
using an exchange of US$1 =
CDN$1.2562, representing the average
daily exchange rate for United
States dollars in terms of Canadian dollars presented by the
Bank of Canada on March 24, 2021.
Trent Mell, President & Chief
Executive Officer, commented:
"We are appreciative of Glencore's ongoing support for our
strategy of producing the world's most sustainable cobalt and
establishing First Cobalt as the only North American producer of
cobalt for the EV market. This transaction will eliminate all
corporate debt ahead of a financing package that is being
negotiated for the refinery expansion and frees up the security
package associated with the refinery. Glencore has been a valuable
partner and a significant contributor to the success of First
Cobalt to date and we are excited to deliver value to them as
shareholders of the Company moving forward."
The Company has raised significant funds to date through a
$10 million joint investment from the
Government of Ontario and
Government of Canada, a
$10 million equity raise, a
$4 million asset sale and more than
$7 million in early warrant
exercises. The financing process for the debt portion of the
refinery financing plan is in progress, remains on schedule, and is
expected to provide the remaining funding required for the project
to be fully financed.
Completion of the repayment of the loan contemplated by the
amendment to the loan agreement and related notice is subject to,
among other things, obtaining necessary regulatory approvals,
including acceptance of the TSXV under TSXV Policy 4.3 -- Shares
for Debt. The Company has entered into this loan amendment
agreement to settle outstanding debt for shares in order to
preserve cash and reduce the amount of project debt required to
fully finance the refinery project.
The Company is in the process of seeking to obtain the necessary
regulatory approvals.
About First Cobalt
First Cobalt's mission is to be the most sustainable producer of
battery materials. The Company owns North
America's only permitted cobalt refinery, a critical asset
in the development and manufacturing of batteries for electric
vehicles. First Cobalt owns the Iron Creek cobalt-copper project in
Idaho, USA as well as several
significant cobalt and silver properties in the Canadian Cobalt
Camp.
On behalf of First Cobalt Corp.
Trent Mell
President & Chief Executive Officer
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Cautionary Note Regarding Forward-Looking
Statements
This news release may contain forward-looking statements and
forward-looking information (together, "forward-looking
statements") within the meaning of applicable securities laws and
the United States Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, are
forward-looking statements. Generally, forward-looking statements
can be identified by the use of terminology such as "plans",
"expects', "estimates", "intends", "anticipates", "believes" or
variations of such words, or statements that certain actions,
events or results "may", "could", "would", "might", "occur" or "be
achieved". Forward-looking statements involve risks, uncertainties
and other factors that could cause actual results, performance, and
opportunities to differ materially from those implied by such
forward-looking statements. Factors that could cause actual results
to differ materially from these forward-looking statements include
the failure to obtain regulatory approvals for the loan amendments
and are also set forth in the management discussion and analysis
and other disclosures of risk factors for First Cobalt, filed on
SEDAR at www.sedar.com. Although First Cobalt believes that
the information and assumptions used in preparing the
forward-looking statements are reasonable, undue reliance should
not be placed on these statements, which only apply as of the date
of this news release, and no assurance can be given that such
events will occur in the disclosed times frames or at all. Except
where required by applicable law, First Cobalt disclaims any
intention or obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
SOURCE First Cobalt Corp.