Eckhofs win $3m backing for Taruga’s Congo cobalt hunt
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Investors are not shying away from explorers looking for cobalt in risky jurisdictions like the Democratic Republic of the Congo — with Taruga Gold today securing a backing of nearly $3 million.
Taruga (ASX:TAR) has received “firm commitments” from a group of sophisticated investors, including China’s Hongze Group.
The Hongze Group is also an investor in Klaus Eckhof’s Okapi Resources (ASX:OKR), which is also on the hunt for cobalt in the DRC.
Mr Eckhof’s daughter Sheena is a director of Taruga Gold. Mr Eckhof is an advisor.
The shares gained 7 per cent to 23c in Wednesday morning trade.
“The support of Hongze highlights the significant potential of the company’s cobalt projects in the DRC,” Taruga executive director Mark Gasson said.
“Hongze, led by managing partner Mr Raymond Liu, has extensive experience in mineral investments and has interests in a range of ASX-listed companies.”
More than half the world’s cobalt currently comes from the DRC.
But end users are now boycotting supply from the African country over ethical concerns, including the use of child labour to mine the battery metal.
The London Metal Exchange has launched an investigation into whether cobalt mined by children is being traded in London.
The DRC is also facing a fresh outbreak of the deadly Ebola virus, adding a further layer of risk for companies looking to invest there.
Taruga expects to bank roughly $2.8 million from the placement, which is being done at a “slight discount” (an issue price of 21c) to the company’s closing price of 21.5c last Friday.
The investors will also be given unlisted options on a 1-for-1 basis, exercisable at 30c each within 24 months.
Stockhead is seeking comment from Taruga.