M&A British Columbia Cobalt TSX Venture Idaho Utah Ontario OTC ASX

First Cobalt to acquire US Cobalt for $150M

News Release

First Cobalt Announces Friendly Acquisition of US Cobalt

TORONTO, ON — (March 14, 2018) – First Cobalt Corp. (TSX-V: FCC, ASX: FCC, OTCQB: FTSSF) (“First Cobalt”) and US Cobalt Inc. (TSX-V: USCO, OTCQB: USCFF) (“US Cobalt”) are pleased to announce they have entered into a definitive agreement (the “Arrangement Agreement”) whereby First Cobalt will acquire all of the issued and outstanding shares of US Cobalt pursuant to a plan of arrangement (the “Transaction”), further enhancing First Cobalt’s position as a pure-play North American cobalt company.

Under the terms of the Arrangement Agreement, all of the US Cobalt issued and outstanding common shares will be exchanged on the basis of 1.5 First Cobalt common shares for each US Cobalt common share issued and outstanding (the “Exchange Ratio”). The Exchange Ratio represents a 61.8% premium to US Cobalt’s closing price and a 58.5% premium based on both companies’ 5-day volume-weighted average trading prices, both as at March 13, 2018. As part of the Transaction, it is expected that (a) all US Cobalt stock options outstanding will be replaced with First Cobalt stock options and be exercisable for First Cobalt shares based on the Exchange Ratio for the remainder of their original term, and (b) all US Cobalt warrants outstanding will participate in the Transaction on a comparable basis to holders of US Cobalt common shares based on the in-the-money portion of those securities. This implies a total equity value of approximately $149.9 million on a fully-diluted in-the-money basis.

Upon completion of the Transaction, existing First Cobalt and US Cobalt shareholders will own approximately 62.5% and 37.5% of the combined company respectively, on a fully-diluted in-the-money basis, assuming all US Cobalt options and warrants are exercised prior to completion of the Transaction.

Transaction Highlights

Clean Cobalt: Strategically positions First Cobalt as a leading non-DRC cobalt company with North American projects located in close proximity to infrastructure as well as electric vehicle and technology hubs such as Michigan and California
Vertically Integrated: Pure-play North American cobalt company with three significant North American assets
Ontario: 50 historic mines across 100 km2 in the Canadian Cobalt Camp
Idaho: Iron Creek Cobalt Project in the U.S. with a historic mineral resource estimate (non-compliant with NI 43-101) of 1.3M tons grading 0.59% cobalt
Refinery: The only permitted cobalt refinery in North America capable of producing battery materials
Revaluation Opportunity: Combined entity will have an enhanced capital markets profile with a global institutional shareholder base, a strong balance sheet and a proven management team

Trent Mell, First Cobalt President and CEO commented,

“We foresee a shortage of cobalt over the next five years yet there are few companies doing significant work to identify new sources of supply. This transaction creates a larger platform to discover and develop cobalt projects for the growing electric vehicle market by combining high quality North American assets in two of the best cobalt jurisdictions outside the DRC. US Cobalt’s Idaho project complements our Canadian Cobalt Camp properties, offering upside potential for shareholders of both companies. We view the First Cobalt Refinery as a strategic asset as it is the only permitted cobalt refinery in North America capable of producing battery materials. We look forward to working with the US Cobalt technical team as they complete drilling in support of a maiden mineral resource estimate expected later in 2018.”

US Cobalt CEO Wayne Tisdale commented,

“The transaction offers our shareholders an opportunity to benefit from a larger North American cobalt company with a portfolio of high quality assets and a strong balance sheet. US Cobalt shareholders will have meaningful ownership in a vertically integrated pure-play cobalt company with a proven and experienced management team that shares our commitment to creating long-term sustainable value. We are very proud of what the US Cobalt team has accomplished in a very short period of time. We look forward to advancing our original vision that demand for ethically-sourced cobalt is just beginning.”

Benefits to First Cobalt Shareholders

Acquisition of a high quality asset in the Idaho Cobalt Belt with excellent near-term resource potential
Strengthens and de-risks portfolio of assets with the addition of an advanced exploration project with a historic non-compliant resource estimate
Opportunity to leverage the First Cobalt refinery through exposure to projects in two jurisdictions
Aligns with First Cobalt’s strategy of growing its presence in North America

Benefits to US Cobalt Shareholders

Immediate and significant premium of approximately 61.8% based on the prior day closing price, and 58.5% based on the 5-day VWAPs of both companies
US Cobalt shareholders will maintain a meaningful position in First Cobalt, allowing for upside participation as First Cobalt progresses with exploration and development projects
US Cobalt shareholders will benefit from the increased size and liquidity of the combined company
Combined company has significant revaluation potential as a vertically integrated pure-play cobalt company with assets outside the DRC
US Cobalt exploration team joins a First Cobalt senior management team with significant experience in exploration, development and operations across various jurisdictions with a history of creating shareholder value

Transaction Summary

The Transaction will be completed pursuant to a plan of arrangement. The Transaction will require approval by two thirds of the votes cast at a special meeting of US Cobalt shareholders expected to be held in May 2018 with the Transaction expected to close by the end of May 2018. The directors and senior officers of US Cobalt, representing approximately 6.7% of the outstanding US Cobalt common shares, have entered into voting support agreements, pursuant to which they will vote their common shares held in favour of the Transaction.

In addition to securityholder and court approvals, the Transaction is subject to applicable regulatory approvals, including acceptance by the TSX-V, and the satisfaction of certain other closing conditions customary for a transaction of this nature. The Arrangement Agreement includes customary deal protections, including non-solicitation covenants, including a $5.5 million termination fee payable by either party under certain customary circumstances.

First Cobalt has agreed to appoint a US Cobalt nominee to its Board of Directors effective at the closing of the Transaction.

Full details of the Transaction will be included in the meeting materials which are expected to be mailed to the shareholders of US Cobalt in April 2018.

Board of Directors’ Recommendations

The Arrangement Agreement has been unanimously approved by the Boards of Directors of First Cobalt and US Cobalt. The Board of Directors of US Cobalt recommends that its shareholders vote in favour of the Transaction.

The Board of Directors of US Cobalt has received opinions from each of Fort Capital Partners and Eight Capital Corp. that, based upon and subject to the assumptions, limitations, and qualifications stated in each such opinion, the consideration to be received by US Cobalt shareholders (other than First Cobalt) pursuant to the Transaction is fair, from a financial point of view, to such US Cobalt shareholders.

Advisors and Counsel

Canaccord Genuity Corp. acted as financial advisor to First Cobalt. Fasken Martineau DuMoulin LLP acted as legal counsel to First Cobalt. Fort Capital Partners acted as financial advisor to US Cobalt and has provided a fairness opinion to the US Cobalt Board of Directors. Eight Capital Corp. has provided a second fairness opinion to the US Cobalt Board of Directors. Cassels Brock & Blackwell LLP acted as legal counsel to US Cobalt.

About First Cobalt

First Cobalt assets include almost half of the historic mining properties in the Cobalt Camp in Ontario, Canada. First Cobalt controls 50 historic mines over 10,000 hectares as well as a mill and the only permitted cobalt refinery in North America capable of producing battery materials. First Cobalt began drilling in the Cobalt Camp in 2017 and seeks to build shareholder value through new discovery and growth opportunities.

About US Cobalt

US Cobalt is an exploration company focused on the acquisition and development of deposits of production grade metal which are critical components to power storage solutions including lithium-ion batteries for electric vehicles and consumer electronics. US Cobalt’s key assets are located in Idaho and Utah.

On behalf of First Cobalt Corp.

Trent Mell
President & Chief Executive Officer

On behalf of US Cobalt Inc.

Wayne Tisdale
President

For more information visit or contact:
Heather Smiles Wayne Tisdale
Investor Relations President
info@firstcobalt.com info@uscobaltinc.com
+1.416.900.3891 +1.604.639.4457
www.firstcobalt.com www.uscobaltinc.com

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.

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