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Cobalt, nickel group Jervois Global readies $200m raising

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Ambitious battery metals play Jervois Global is set to go to shareholders for capital to restart the group’s Brazilian refinery.

Street Talk understands Jervois Global has called in investment bank UBS to help arrange and underwrite a $200 million equity raising, which is slated to hit the market on Wednesday.

Jervois Mining has turned its attention to its second equity raising in less than 18 months.  Photo: Arsineh Houspian

Funds raised are expected to be used to get the company’s Sao Miguel Paulista nickel and cobalt refinery in Brazil back up and running, with the company previously flagging a final investment decision on the project by the end of this year.

Jervois Global acquired the SMP refinery mid-last year and has had engineering firm Ausenco helping with feasibility works. Investors reckon it could require substantial investment to get back into production, which would need to come from equity investors.

Jervois Global had $52.3 million in unrestricted cash at September 30, which was down from $57.6 million three months earlier. The group had a disappointing third quarter at its Finland operations, but recently opened its Idaho Cobalt Operation and told shareholders it should produce first cobalt and copper concentrate by the end of this year.

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The raising comes after a bumpy year for Jervois Global. Its shares are down 10 per cent since this time last year and 16 per cent since January 1. The rollercoaster ride partly reflects swings in the price of cobalt, which has traded from $US22 a pound to as much as $US39 a pound this year.

Shaw and Partners analysts said every $US1 movement in the cobalt price impacts earnings at Jervois Global’s Kokkola refinery by $US2 million on a per annum basis.

Kind of a big deal

A $200 million raising would be a big deal for Jervois Global, which finished trading on Tuesday with a $768 million market capitalisation. A $200 million equity deal at a 15 per cent discount to the last close would see the company have to issue nearly 450 million new shares. [It had 1.52 billion on issue as at Tuesday night].

Of course the wildcard would be some form of strategic investor. The group counts battery metals-mad AustralianSuper as its biggest shareholder, which is expected to tip into the raising. So too will Mercuria, one of the world’s largest independent energy and commodity traders, which has a 7 per cent stake.

The company is expected to go into a trading halt on Wednesday morning.

Anthony Macdonald is a Chanticleer columnist. He is a former Street Talk co-editor and has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies. Connect with Anthony on Twitter. Email Anthony at a.macdonald@afr.com
Sarah Thompson has co-edited Street Talk since 2009, specialising in private equity, investment banking, M&A and equity capital markets stories. Prior to that, she spent 10 years in London as a markets and M&A reporter at Bloomberg and Dow Jones. Email Sarah at sarah.thompson@afr.com
Kanika Sood is a journalist based in Sydney who writes for the Street Talk column. Email Kanika at kanika.sood@afr.com.au

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