Mr. Trent Mell reports

FIRST COBALT ANNOUNCES FINANCING FOR CONSTRUCTION OF NORTH AMERICAN BATTERY MATERIALS REFINERY

First Cobalt Corp. has arranged a combined secured convertible debt and brokered equity financing package with an aggregate value of approximately $45-million (U.S.) to finance the construction of its wholly owned hydrometallurgical refinery located in Ontario, Canada.

The financing consists of the following components:

• An offering of $37.5-million (U.S.) principal amount of 6.95 per cent senior secured convertible notes due Dec. 1, 2026, led by Cantor Fitzgerald & Co. (CF&Co);
• An overnight marketed public offering of common shares in the capital of the company led by BMO Capital Markets for gross proceeds of approximately $9.5-million (approximately $7.5-million (U.S.)), at a price per offered share to be determined in the context of the market.

"This is one of our most important catalysts for the year, as this financing will allow us to advance construction of our Canadian battery material refinery," said president and chief executive officer Trent Mell. "Every director and officer is participating in the financing, underlining our confidence in our business strategy and strengthening our alignment with shareholders.

"Our vision is to be the most sustainable producer of battery materials, starting with North America's only domestic supply of battery-grade cobalt. Longer term, we are pursuing the creation of a battery park around our refinery, which would include battery recycling, nickel sulphide production and lithium-ion battery precursor manufacturing. We intend to capitalize on this first-mover advantage and leverage our position as an ultralow-carbon operation."

The company intends to use the aggregate net proceeds of the note offering and the equity offering for capital expenditures associated with the expansion and recommissioning of the refinery, including buildings, equipment, infrastructure and other direct costs, as well as engineering and project management costs.

The note offering and equity offering announced today will replace the debt financing process announced by the company on March 31, 2021. The company's management and board of directors determined that the financing terms and covenants of the financing described herein are superior to the debt financing the company was previously pursuing.

Upon completion of this financing, the company will advance discussions on a non-dilutive working capital facility to cover (i) a minimum liquidity requirement of $5-million (U.S.) and (ii) cobalt hydroxide feed purchases through to the time of sale of cobalt sulphate to market.

Convertible note offering

The company engaged CF&Co to act as sole placement agent for the note offering, which is being conducted on a private placement basis. The note offering consists of the issuance of $37.5-million (U.S.) principal amount of 6.95 per cent convertible senior secured notes due Dec. 1, 2026 (subject to an option to increase, as described below). The company has entered into convertible note subscription agreements dated Aug. 23, 2021, with certain investors to purchase the entire initial principal amount of notes under the note offering. A note indenture will be entered into between the company and Global Loan Agency Services Ltd. (GLAS), as trustee for the notes, as well as other customary associated security documentation, upon closing of the note offering.

Holders of notes will have an option to require the company to issue to the noteholders a pro rata amount of an aggregate additional $7.5-million (U.S.) principal amount of notes, issued at par, for 60 days from the date hereof. The notes, including any aforementioned additional notes, will bear interest at 6.95 per cent per annum, payable in cash semi-annually in arrears in February and August of each year and will mature on Dec. 1, 2026. The company will be the borrower under the notes and the obligations will be guaranteed by the company's Canadian, United States and Australian subsidiaries, as well as any other subsidiary that guarantees the company's obligations from time to time, subject to certain customary exclusions.

The notes will be secured by a first-priority security interest (subject to customary permitted liens) in substantially all of the company's assets and the assets and/or equity of the secured guarantors. Security against the company's Iron Creek project in Idaho will be released upon achieving certain refinery commissioning thresholds.

The notes will be convertible into common shares in the capital of the company at 125 per cent of the reference price per common share at any time until the close of business on the second trading day immediately preceding the maturity date. Such reference price will be equal to the price per share of the equity offering. Converting noteholders will be entitled to an interest make-whole payment, which, subject to the prior approval of the TSX Venture Exchange, may be satisfied in common shares. The company sought and obtained a waiver from the maximum period conversion period requirements under TSX-V policies, such that the conversion period of the notes may be up to 45 days from the issuance date of any additional notes.

Should the company achieve a third party green bond designation during the term of the indenture, the interest rate on future payments shall be reduced by one-eighth to 6.825 per cent per year.

The indenture will contain certain positive and negative covenants in favour of the trustee for the benefit of the noteholders. The company will be obligated to make an offer to repurchase the notes at par in certain circumstances. After the third anniversary of the issue date of the notes, the company may mandate the conversion of the notes at its option in the event the trading price of the common shares exceeds 150 per cent of the conversion price for at least 20 trading days, whether consecutive or not, during any consecutive 30-trading-day period.

The notes will also be subject to customary events of default, dilution protection, limitations on beneficial ownership and registration rights in certain circumstances.

The note offering is expected to close on or about Sept. 1, 2021, concurrently with the equity offering. Closing of the note offering is subject to customary closing conditions, including the approval of the note offering and the listing of the underlying common shares by the TSX-V. The completion of the note offering is also conditional on completion of the equity offering.

Equity offering

The equity offering will be led by BMO Capital Markets as sole agent. In connection with the equity offering, the company intends to enter into an agency agreement with the agent.

The company expects to file a prospectus supplement to its previously filed short-form base shelf prospectus dated Nov. 26, 2020, in connection with the equity offering by no later than Aug. 26, 2021.

The offered shares are being offered (i) to the public in each of the provinces of Canada, other than Quebec, and (ii) in such other international jurisdictions, as permitted.

The prospectus supplement, when filed, will contain important additional information about the company, the note offering and the equity offering. Prospective investors should read the prospectus supplement and the base shelf prospectus, including the documents incorporated by reference therein, and the other documents the company has filed on SEDAR before making an investment decision. Copies of the base shelf prospectus and, when filed, the prospectus supplement to be filed in connection with the equity offering can be found on SEDAR.

The equity offering is scheduled to close on or about Sept. 1, 2021, and is subject to customary closing conditions, including the receipt of all necessary regulatory approvals, including the approval of the TSX-V. The completion of the equity offering is also conditional on completion of the note offering.

Termination of the company's at-the-market program

In the context of arranging for the financing package, on Aug. 23, 2021, the company provided notice to Cantor Fitzgerald Canada Corp. (CFCC) of the company's intention to terminate its at-the-market (ATM) offering program, effective as of Sept. 2, 2021. The ATM program was established on Feb. 22, 2021, allowing the company to issue common shares with a value of up to $10-million from treasury to the public from time to time, at the company's discretion. Distributions of the common shares through the ATM program were made pursuant to the terms of an equity distribution agreement between the company and CFCC, dated Feb. 22, 2021. The company raised a total of $686,274.10 under the ATM program. All sales under the ATM program have been suspended.

About First Cobalt Corp.

First Cobalt's mission is to be the most sustainable producer of battery materials. In 2022, the company plans to commission North America's only cobalt sulphate refinery, a critical asset in the development and manufacturing of batteries for electric vehicles. First Cobalt also owns the Iron Creek cobalt-copper project in Idaho, United States, as well as several significant cobalt and silver properties in the Canadian cobalt camp.

We seek Safe Harbor.