First Cobalt Corp (CVE:FCC) (OTCQX:FTSSF) revealed on Monday that it has inked a letter of intent with Kuya Silver Corporation to sell a portion of its silver and cobalt mineral exploration assets in the Canadian Cobalt Camp and form a joint venture to advance the remaining mineral assets.
The Toronto-based company said the transaction will allow the two companies to resume mineral exploration in a historic silver district while providing First Cobalt capital for the recommissioning of its Canadian refinery in Northern Ontario.
According to the key terms, Kuya will pay $4 million on closing for a 100% interest in the Kerr area properties, comprised of $1 million in cash and $3 million in Kuya shares.
Kuya will pay an additional $1 million in cash or shares within six months of the Kerr assests acquisition should it elect to exercise an option to earn up to a 70% interest in First Cobalt’s remaining Cobalt Camp assets.
The company said the option to acquire an interest in the remaining assets can be exercised by Kuya by satisfying the following earn-in conditions: 50% interest by incurring $2 million in expenditures and making a payment to First Cobalt of $300,000 in year 1; 60% interest by incurring $1 million in expenditures and a payment of $350,000 in year 2; and 70% interest by incurring $1 million in expenditures and a payment of $350,000 in teh third year.
Meanwhile, Kuya will make a milestone payment of $2.5 million in cash or shares on completing a maiden mineral resource estimate of at least 10 million silver equivalent ounces on either of the Kerr assets or the remaining assets. The payment increases to $5 million should the resource exceed 25 million silver equivalent ounces, according to the terms.
It falls on First Cobalt to spend $1 million of the flow through proceeds it raised in August 2020 on eligible expenditures, split equally between the Kerr assets and the remaining assets.
First Cobalt will have a right of first offer to refine base metal concentrates produced at its refinery as well as a back-in right for any discovery of a primary cobalt deposit on the remaining assets.
The parties intend to complete the transaction in the first quarter of 2021, at which point Kuya will own the Kerr assets outright. The companies will form a 70-30 joint venture on the remaining assets when all the terms of deal are satisfied.
“This transaction will provide capital to advance the First Cobalt refinery project while we advance a larger debt financing solution. The electric vehicle landscape is moving quickly and proceeds from this transaction will allow us to remain on schedule, while reducing dilution,” said First Cobalt CEO Trent Mell in a statement.
“Equally important is the partnership that we are forming with Kuya to continue advancing a one-of-a-kind Canadian silver and cobalt district.”
Mell noted that First Cobalt had spent “considerable” time consolidating the historic high-grade mining district and reviving what was “once a world class silver and cobalt mining camp.”
“Kuya’s leadership team has tremendous experience with high grade silver deposits and we look forward to working with them on these coveted assets,” added Mell.
First Cobalt holds the largest land package in the historic silver-cobalt mining camp of Cobalt, Ontario, with more than 10,000 hectares and over 50 of the more than 100 past-producing mines, including some of the region’s largest high-grade silver producers. The firm’s remaining Assets cover more than 9,000 hectares and include historic mines within the Silver Centre area where exploration drilling intersected new cobalt-silver veins that remain to be fully tested.
First Cobalt owns North America’s only permitted cobalt refinery. Cobalt refining is critical to the manufacturing of batteries for electric vehicles.
Contact the author Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive
Story by ProactiveInvestors
Please Help Support BeforeitsNews by trying our Natural Health Products below!
Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST
Order by Phone at 888-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST
Order by Phone at 888-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST
Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!
HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation
Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.
pathogens and gives you more
energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser! Cleans out toxic buildup with oxygen!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover - Reduces Smart Meter radiation by 96%! (See Video)
Immusist Beverage Concentrate - Proprietary blend, formulated to reduce inflammation while hydrating and oxygenating the cells.