Cobalt 27 buys royalty on Canada nickel, cobalt project

By Nicole Mordant

(Reuters) - Cobalt 27 Capital Corp (TSXV:KBLT.V - News), a Canadian company created to buy the red-hot battery metal, said on Thursday it has bought a royalty on all future nickel and cobalt production from the Dumont project in Quebec in a deal worth $70 million.

The transaction is for a 1.75 percent net smelter return royalty on output from Dumont, which contains the world's largest undeveloped nickel and cobalt reserves, Cobalt 27 Capital said.

The project is jointly owned by RNC Minerals (Toronto:RNX.TO - News) and private equity firm Waterton Global Resource Management.

RNC said last month that it is in talks with Japanese trading houses, mine operators and financiers to help secure $1 billion to build the project, which is expected to start production in 2020.

Prices for cobalt have nearly tripled in the past 18 months, while nickel is up 50 percent in the past six months, on expectations of strong demand for the ingredients of rechargeable batteries used in electric vehicles.

Cobalt 27 said it is also in talks for other cobalt streaming and royalty deals and plans to finalize the first of several streaming agreements over the next year. Streaming deals offer miners upfront cash in exchange for future production at a discounted, fixed price.

(Reporting by Nicole Mordant; Editing by Savio D'Souza)