Eastern Iron is looking to Poland for its foray into cobalt, but the news didn’t sit well with investors who dropped the company’s shares.

Eastern’s (ASX:EFE) share price tumbled 21.1 per cent to 1.5c by midday after it unveiled a strategy to get into the commodity that has been revving up battery metals stocks in 2017.

EFE shares over the past six months. Source: Investing.com
EFE shares over the past six months. Source: Investing.com

Eastern has struck an all-scrip deal to acquire Ion Mining, which is developing the Przecznica cobalt sulphide project located in South West Poland.

The deal will cost 250 million ordinary Eastern Iron shares and 240 million performance shares.

Several ASX-listed juniors have ventured into cobalt exploration this year due to the commodity’s high prospects.

Cobalt stocks — led by Collerina Cobalt (ASX:CLL) with a phenomenal spike of 1400 per cent — finished miles ahead of the other battery metals.

Demand for cobalt is expected to grow because of its use in lithium cobalt oxide electrodes — a common lithium ion battery technology used in electric cars.

Bloomberg New Energy Finance estimates electric cars will account for 2 per cent of the market by 2020, rising to 8 per cent by 2025 and 20 per cent by 2030.

The project Eastern plans to acquire covers four historical cobalt mines and several workings.

The company plans to target a 2km strike of cobalt mineralisation down to a depth of about 300m that is hosted within a target horizon stretching for more than 20km.

Past rock chip sampling has returned cobalt grades of up to 1 per cent — which is considered medium grade.

Eastern’s focus up until now has been on iron and copper exploration in the eastern states of Australia.

As part of the acquisition, the company will undertake a placement to raise about $3.48 million at an issue price of 1.2c — a 36.8 per cent discount to the last traded price prior to today’s announcement.

The cash raised will be used to progress the proposed acquisition and exploration of the Przecznica project, as well as to fund exploration at Eastern Iron’s Nowa Nowa copper project in Victoria.

Eastern’s first step on completion of the deal will be to drill 850m across five holes to test the thickness, number of mineralised lenses, grade and mineralogy of the Maria Anna exploration target.

The company has been contacted for comment.