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It’s been a long time coming, but Nevada Clean Magnesium has finally completed its joint venture agreement with Norwegian industrial minerals company ScanMag. The companies renegotiated the terms of their agreement back in January, but the deal has now been formally closed.
The companies renegotiated the terms of their agreement back in January, but the deal has now been formally closed. Nevada Clean had previously granted an extension to ScanMag regarding the terms and conditions of the previous agreement last October.
The original JV was aimed at helping both companies collaborate on and mutually benefit from the development of their respective dolomite deposits in the US and Norway. Nevada Clean holds the Tami-Mosi project in Nevada, while ScanMag is focused on a dolomite and brucite deposit near the village of Glomfjord in Norway.
As per the new agreement, both companies will “establish a separate technical development company for the testing of aspects of the magensium processing proof of concept,” with each owning 50 percent of the data, findings and intellectual property developed through the venture. ScanMag will fund an initial contribution for the company.
“The technical development done initially for ScanMag should lead the way to lowering the process risk for our Tami-Mosi project in Nevada,” said Nevada Clean CEO Ed Lee in a statement.
Lothar Maruhn, CEO of ScanMag, is also positive on the agreement and on working with Nevada Clean in general. “We are very pleased to have such a highly experienced technical team from NCM to assist us in the development of our facility through to commercialization and production within a short period of time,” he stated in Monday’s release. “We are looking forward to our next steps, as the technical experience that NCM provides us is a major requirment [sic] to secure our project financing.”
Other terms of the agreement include an investment of $5 million in Nevada Clean by ScanMag over four years. ScanMag will pay $2 million within the next year, followed by payments of $83,300 per month for three years after that. Shares will be issued in connection with those investments, and ScanMag will be able to appoint one board member to Nevada Clean so long as it retains no less than a 12-percent interest in the company.
Nevada Clean will also receive a 10-percent stake in ScanMag, dilutable down to a 2-percent undiluted interest in the company.
“It’s been long in the making and we are very pleased to have achieved this joint venture with a similar company to ours,” Lee stated. “The companies are looking to bulid magnesium metal producing operations so this agreement is a monumental milestone for both companies.”
To be sure, since most of the world’s magnesium is currently produced in China, it’s interesting to see magnesium operations in the US and Norway working to advance operations outside of the country. Investors will no doubt be keeping an eye out for any further developments regarding the agreement.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Nevada Clean Magnesium is a client of the Investing News Network. This article is not paid-for content.