PERTH (miningweekly.com) – Dual-listed Jervois Mining has struck out at TSX-V-listed First Cobalt for urging fellow shareholders in takeover target eCobalt to vote against a proposed merger.

Jervois in April struck a friendly merger agreement with TSX-listed eCobalt, offering 1.65 common shares in Jervois for every eCobalt share held, representing an implied offer price of C$0.36 per eCobalt share.

The transaction will result in Jervois issuing some 262.4-million new shares, and if all eCobalt options and warrants are exercised, a further 47-million shares. On the close of the transaction, Jervois shareholders will hold a 40% interest in the newly combined company, with eCobalt shareholders holding a 47% interest.

Following the merger announcement, First Cobalt, which owns a 5.8% interest in eCobalt, issued an open letter to eCobalt shareholders claiming that the merger would be an "incredibly dilutive" transaction and would fail to advance eCobalt’s Idaho cobalt project, while also introducing new risks including unproven exploration acreage in Uganda and an undeveloped nickel project in Australia.

First Cobalt urged shareholders to maintain the independence of eCobalt, or in failing that, to run a "formal and competitive sales process".

eCobalt responded shortly after, calling the open letter "self-serving".

“[First Cobalt’s] aggressive opposition to the proposed Jervois merger is a last resort attempt to gain access to eCobalt's superior quality asset base,” the Canadian firm told shareholders, noting that First Cobalt had only gained its interest in eCobalt following the merger announcement, and only through an exchange of share, rather than an outright purchase.

“First Cobalt has failed to disclose what its true intentions are with respect to eCobalt. Given the inferior quality of First Cobalt's assets relative to the assets of eCobalt and Jervois, eCobalt shareholders should be highly skeptical of First Cobalt's motivation,” eCobalt told shareholders.

Jervois on Tuesday also assured eCobalt shareholders that the Idaho cobalt project would be an important part of the future of the restructured company, noting that the company would bring a number of highly experienced base metals mining, processing and refining personnel to the merger.

Jervois noted that the merger would also allow eCobalt to gain access to capital markets, allowing access to funding to develop the Idaho project.

Jervois has also binned First Cobalt’s claims that the ore from the Idaho project could be processed at First Cobalt’s mothballed Ontario facility, thus eliminating most of the capital associated for a new plant.

Pointing to a desktop report by engineering firm Primero, Jervois noted that between $100-million and $105-million would be required to rebuild the mothballed site to produce cobalt carbonate.

This was broadly in line with the $129-million that eCobalt would be required to spend on a new facility within the US, Jervois pointed out, and did not take into account the additional capital that First Cobalt’s refinery would require to produce a cobalt sulphate or the additional transport costs for the ore.

Further, eCobalt’s development plans for its Idaho project would see the production of around 60 t/d to 70 t/d of concentrate, which exceeded the capacity of the First Cobalt facility.

Jervois shareholders are expected to vote on the merger on July 18, with eCobalt shareholders set to vote on the transaction on July 19.