Canada’s Global Energy Metals will fully acquire three cobalt projects from Hammer Metals in a move that makes it a leader in cobalt exploration and development in the Mount Isa area.
Under the deal, GEMC will fully acquire the Millennium cobalt project, as well as the neighboring Mount Dorothy and Cobalt Ridge projects, the company announced.
According to a press release, GEMC has now established a district-scale cobalt opportunity in the area, making it the leading cobalt explorer and developer in the prolific Queensland-based mining jurisdiction.
“This combination creates one of the largest and most exciting exploration cobalt packages in Australia. Spurred by the recent drilling success and confidence in adding to the already significant cobalt tonnage at Millennium, we are pleased to announce this acquisition which furthers our long-term growth and value building strategy,” said Mitchell Smith, president and CEO of GEMC.
“With this acquisition, we continue to consolidate multi-million tonne cobalt assets and maximize cobalt leverage for our shareholders. Upon completion, we plan to recommence exploration and expansion of the project with the intent to commission a current resource estimate for the projects as well as identify new opportunities in the cobalt rich district,” he added.
In exchange for the balance of Millennium that it does not already own, as well as Mount Dorothy and Cobalt Ridge, GEMC will issue Hammer Metals shares equal to 19.9 percent of its issued share capital.
Twenty percent of the shares will be released on issuance, with an additional 40 percent released every six months thereafter until 12 months after the date of issuance.
Hammer Metals will remain as the operator of Millennium for at least the first year of the agreement, with that role being reviewed and renewed on an annual basis going forward. As a result, Hammer Metals will receive an operator’s fee of 10 percent of the expenditures carried out on the property.
“Hammer is pleased to have the opportunity to be invested in such a dynamic and focused cobalt explorer and developer while retaining exposure to longer term value creation that the Millennium and Mt. Isa Projects will offer,” stated Alex Hewlett, managing director at Hammer Metals.
Hammer Metals will also help GEMC identify and acquire additional cobalt assets in the Mount Isa region in order to fulfill its mandate of creating a diversified and viable supply of material to offset current reliance on cobalt sourced in the Democratic Republic of Congo.
Millennium is an advanced-staged cobalt project with a large defined zone of cobalt-copper mineralization. A resource estimate completed in late 2016 shows 3.1 million tonnes of inferred resources grading 0.14 percent cobalt, 0.34 percent copper and 0.12 grams per tonne gold.
“[A] resource estimate completed by Hammer Metals outlined a mineralised zone over a strike length of approximately 1.5 kilometers. Cobalt-copper mineralisation is associated with shear zones hosted within a sequence of volcanic and sedimentary units,” GEMC says in Tuesday’s press release.
“Additional mapping, soil geochemistry and rock sampling has identified an additional 1.5 kilometers of anomalous cobalt-copper mineralisation in geological analogues that occur along a potential strike extension in the northern half of the tenement package. This area has not been tested with any drilling to date. The Northern Target provides excellent opportunity to increase the overall resource potential of the Millennium project,” the company also says.
In addition to its Australian cobalt projects, GEMC also holds the Werner Lake cobalt project in Ontario. The company says it is one of Canada’s most advanced near-term production primary cobalt projects.
As of 11:47 a.m. EST on Wednesday (June 27), GEMC was trading at C$0.10. Meanwhile, Hammer Metals was at AU$0.028.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Global Energy Metals is a client of the Investing News Network. This article is not paid-for content.