LSE- and TSX-listed Anglo Pacific has completed the acquisition of a 70% net interest in a stream on cobalt production from the Voisey's Bay mine in Canada from private equity sellers for a cash consideration of $205-million and further contingency of up to $27-million.

“The transaction is not only the largest in our company's history, but it also marks the start of a fundamental transformation, as we reposition the business towards twenty-first century commodities and become an increasingly battery metals focused royalty and streaming company,” said CEO Julian Treger.

The transaction provides Anglo Pacific with significant exposure to a strategic mineral coupled with additional scale with which to undertake similar transactions to further expand its commodity exposure in high growth sectors.

Treger said Anglo Pacific had a $20-million funding commitment with Incoa and a further $70-million of optionality within its business with Piauí, along with several prospective deals within the pipeline for similar commodities aligned to the battery storage and electric vehicle revolutions.

“This is the ideal time to proactively redeploy capital from the iron-ore sector and invest in cobalt,” he said, citing a strong increase in the cobalt price.

Since the start of 2021, the cobalt price has increased by about 60% reaching two-year highs at $24.95/lb, and has increased 4% since Anglo Pacific announced the acquisition. The iron-ore price, on the other hand, has fallen by 4%.

“Fundamentals of the cobalt market and future outlook for the commodity are firmly backed by the financial stimulus and policy frameworks adopted by western governments in order to aid the green revolution through emissions free transport, as well as the ambitious goals set out by individual automakers to become fully electric; most recently joined by Volvo and Jaguar,” said Treger.

The Voisey’s Bay acquisition was financed through an oversubscribed equity placing and retail offer of $66-million, the previously announced profitable monetisation of a portion of the group's Labrador Iron Ore Royalty Corporation investment, and the completion of a new $180-million credit facility.