Investors hunting cobalt deals approached Sherritt, CEO says

TORONTO – Sherritt International has been approached by investors seeking to buy a share of its cobalt production as a way of gaining exposure to the red-hot battery metal, the Canadian miner’s CEO said.

Cobalt is rapidly becoming an investor darling as expectations of a shortage driven by the growth of electric vehicles have helped the price more than triple in 18 months. On Friday, it rose above $40/lb for the first time in almost a decade.

“We have had a number of approaches on streams,” Sherritt CEO David Pathe said in an interview. “A lot of people are looking to get cobalt exposure.”

In a streaming deal, an investor provides upfront funding to miners in exchange for a share of their future output. Historically, they have tended to be for precious metals like gold and silver, but the boom in cobalt prices has added a new commodity to the mix.

Vale is seeking bids on a cobalt stream at its Voisey’s Bay complex in Canada, according to people with knowledge of the matter. Gold producer Agnico Eagle Mines is in the process of dusting off its idled cobalt land holdings in Canada after receiving multiple enquiries, CEO Sean Boyd said in a February 26 interview. And Cobalt 27 Capital, a Toronto-listed vehicle designed to invest in the battery metal, has been raising money to add streaming deals to its physical cobalt stash.

Sherritt, which has stakes in nickel/cobalt mines in Cuba and Madagascar, would consider selling cobalt in a so-called streaming deal if the terms were attractive enough, Pathe said. But with prices continuing to rise, he sees no urgency.

“There are more and more people getting really bullish on cobalt now,” he said, predicting that the price may surpass its 2008 highs and rise above $55 in the next 12 to 18 months. Sherritt earlier this year lured investors to buy new shares by partially linking the deal to the price of cobalt.

Sherritt shares were up 2.5% at 10:30 am, in Toronto.