back Mitchell Smith of Global Cobalt Corp. (V.GCO) sees market opportunity for transformative spin out
September 14, 2015 | Category: Media & Interviews
Stockhouse (SH) interviewed Mitchell Smith (MS), Corporate Development at Global Cobalt to better understand the company's objectives in light of recent corporate developments including the spin-out of Global Energy Metals Corporation - a resource company focusing on identifying, acquiring, partnering and developing mineral projects associated with the battery metals sector.
SH: Global Cobalt (TSX: V.GCO, Forum) just received approval from shareholders for a transformative transaction that would see the company spin-out a new entity, Global Energy Metals Corporation ("GEMC"), where the Spin Co would take over Global Cobalt's North American assets. What was the reasoning behind this move?
MS: We are convinced that the spin out and new organizational structure is the correct strategy, one which will enhance shareholder value by providing a sharper strategic focus for both companies moving forward. The reorganization will unlock value and enable us to accelerate the expansion of our North American projects in Global Energy Metals while providing shareholders exposure to Karakul and the Altai Satellites that will remain with Global Cobalt. Most importantly, this transaction allows Global Energy Metals to examine other acquisitions in the battery metals space and move forward a strategy to be a bank for these unique projects.
SH: Who will be at the wheel of Global Energy Metals once the transaction closes?
MS: Global Energy Metals has assembled a team that is unparalleled in the cobalt exploration space. We bring with us from Global Cobalt the internal management team and have augmented it with experts in the energy and battery metals industry who are shaping the sector's future. Our team has developed a deep understanding of the battery supply chain and excellent relationships that have produced off-take agreements, funding and engineering/feasibility contracts in the Chinese market. Global Cobalt will continue with a team focussed on the development of the Karakul project, which could be a key supplier of the Chinese cobalt market.
SH: What will management focus on in the next 12 months?
MS: Global Energy Metals Corporation will focus on aggregating of cobalt and other energy metals deposits with established resources to create a bank of advanced-stage battery metals focused projects. We plan to grow our business by maximizing growth and profitability by exploring project level joint ventures with key strategic partners to create value for our shareholders.
We have line of sight on three other cobalt/lithium projects that we would like to move on quickly and are looking for a banking group that sees the opportunity in the battery metals space, and is interested in getting involved.
SH: Considering the depressed commodities market and cobalt's weakened price, why is now a good time to accelerate Global Energy Metals' acquisition and development program?
MS: Since 2010, there has been a sustained dip in the global commodity cycle. One of the few bright spots in the resource market is battery metals demand and pricing. However, many single project companies have been unable to advance projects due to lack of available funds. Global Energy Metals will be an aggregator of battery metals projects, creating an asset bank to ultimately supply market demand for cobalt, lithium, and other battery-related materials. This is the perfect market timing for the consolidation strategy and we have had significant interest from end-users and market analysts.
Glencore recently announced its decision to suspend African copper production in light of the challenging environment for copper and the entire commodities sector. Given the high amount of by-product cobalt produced by these mines, this development may be the catalyst that reverses this trend. In addition the suspension of operations could compound fears over cobalt supply at a time when cobalt demand is ramping up due to increased manufacturing pressure from the rechargeable battery sector. This may just be the "perfect storm" opportunity for a company like Global Energy Metals.
SH: How has Tesla's decision to build a battery plant in the US impacted the industry?
MS: Tesla has received lots of attention regarding its decision to build a plant in the US and will need domestic supply of cobalt, lithium and other materials to feed their supply chain. We have seen Tesla, as well as other battery supply chain participants starting to take ownership stakes in junior companies. This will likely accelerate as the battery material demand increases and companies are focussed on ensuring long-term supply. Battery manufacturers have had a bit of break due to the overall economic climate, but most are foreseeing supply crunch in the near-to-medium term.
SH: Where do you see Global Energy Metals in the next five years?
MS: The company envisions that it will fill a very important long term niche as a future supplier of battery related materials to downstream intermediaries and end users. There are significant value opportunities in aggregating projects and being the go-to bank for the battery market.
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Mitchell Smith of Global Cobalt Corp. (V.GCO) sees market opportunity for transformative spin out