ASX-listed Jervois Mining will acquire TSX-V-listed M2 Cobalt as it seeks to gain a foothold in East Africa.

Under the terms of the agreement, each common share of M2 will be exchanged for one common share of Jervois. This represents an implied offer price of C$0.262 apiece, based on the closing price of Jervois’ common shares on the ASX as at January 21.

The transaction will be voted on by M2’s shareholders during the second quarter. The merger would need 66% of votes to continue.

The merger will lead to an enlarged company with greater scale, liquidity and diversification with significant re-rating potential, the companies said in a statement on Tuesday.

Upon completion of the transaction, Jervois shareholders will hold 77.9% of the enlarged company’s shares and M2 shareholders the balance of 22.1%.

The board of directors of the enlarged company will consist of three nominees from Jervois and one from M2, while Jervois chairperson Peter Johnston and CEO Bryce Crocker will remain in their current roles.

Jervois will retain its primary listing on the ASX and will also apply to list on the TSX-V to provide it with access to the Australian and North American mining capital markets.

Jervois will provide M2 with a $3-million bridge working capital facility.

M2’s entry into Uganda will complement Jervois’ East African ambitions, while M2’s experience of exploration in Uganda provides a strong platform to pursue opportunities around the historic Kilembe copper/cobalt mine and Kasese cobalt refinery.

Uganda has continuation of geological trends from its base metals-rich neighbour, the Democratic Republic of Congo, but with greater political and regulatory stability.

Jervois’ current asset is the Nico Young cobalt/nickel deposit, located in New South Wales. The company is close to finalising a prefeasibility study on a three-million-tonne-a-year heap leach facility, based on a Joint Ore Reserves Committee-compliant inferred mineral resource estimate of 167-million tonnes, grading 0.59% nickel and 0.06% cobalt.

Jervois has also applied for a prospecting licence over the Kabanga nickel project, in Tanzania, which complements its East African regional ambitions.

M2 has an established Ugandan operating presence, with strong government and local stakeholder relationships. Its projects are at target drilling stage and exhibit strong anomalies.

M2’s exploration licences in Uganda cover 2 415 m².