Australia-based cobalt miner Jervois Global is set to go private with a recapitalisation plan due to a slump in cobalt prices.
The miner has reached an agreement with its current lender Millstreet Capital Management, an alternative investment company, to take the company private as part of a prepackaged bankruptcy.
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The recapitalisation proposal aims to strengthen Jervois Global’s balance sheet and inject $145m of new equity capital. Jervois will transfer its assets to a Millstreet nominee.
This funding is earmarked to support the business and growth initiatives, including the restart of the São Miguel Paulista nickel-cobalt refinery in Brazil.
To facilitate this recapitalisation efficiently, Jervois Global and certain subsidiaries will initiate a prepackaged US Chapter 11 procedure, expected to commence in January 2025.
Millstreet’s recapitalisation strategy in Australia will align with the US Chapter 11 plan, involving the disposal of Jervois Global’s material assets to a Millstreet nominee, subject to creditor approvals.
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By GlobalDataA key step will be seeking approval from the Australian Securities Exchange (ASX) for delisting Jervois Global.
Once the recapitalisation is complete, Jervois Global intends to be delisted, with expectations to finalise the process before 30 April 2025.
The decision for recapitalisation comes after Jervois Global conducted extensive due diligence and negotiations for potential partnerships, asset sales, or equity capital injections.
In a press statement, Jervois said: “Due to several factors including the current cobalt price which is, in real terms, at all-time lows, these negotiations have not resulted in a transaction that allows Jervois to recapitalise its group balance sheet on terms more favourable than those provided in the RSA.”
During the Chapter 11 process, Jervois Global will request the suspension of its ordinary shares from trading on the ASX and halt its presence on the TSX Venture Exchange in Canada and US OTC markets.
The latest deal is expected to eliminate all current shareholders of Jervois, which reported no profit in seven years, reported Reuters.
In 2023, Jervois shut down its Idaho cobalt mine in the US, which was the country’s only source.
Jervois CEO Bryce Crocker was quoted by the news agency as saying: “It’s been a difficult few years for us. We needed to restructure.”
Backed by financial support from the US Department of Defense, Jervois faced challenges after China’s CMOC Group opened a mine in the Democratic Republic of Congo in 2023.
