Global Energy Metals (TSX.V:GEMC) strengthened its financial position on Thursday with news of the sale of royalties over its cobalt projects in Australia.
The firm has entered a letter of intent to sell a 0.5% gross metal royalty on its Millennium and Mount Isa projects in Queensland to Electric Royalties. In exchange, it will receive 1.15 million Electric Royalties shares and receive a C$150,000 cash payment.
Meanwhile, Electric Royalties will also be granted a call option to acquire a 0.5% royalty on net smelter returns from Millennium by paying C$500,000 to Global Energy. This is exercisable at any point over the next two years and shares can be used to cover up to 25% of the payment.
Speaking on Thursday, Global Energy’s president and chief executive Mitchell Smith highlighted that the deal provides his firm with a non-dilutive way of pushing Millennium and the Mount Isa projects forward.
“This commitment by Electric Royalties is a significant endorsement of the Millennium and Mount Isa projects by a mine finance firm focused on minerals core to the new energy economy,” he added. “This royalty sales provides Global Energy Metals with an attractive form of financing and short-term investments equal to our market cap through the spin-out of a small royalty on a portion of our Australian projects.”
Millennium contains a JORC inferred resource of 3.1 million tonnes at 0.14% cobalt, 0.34% copper, and 0.12 grams per tonne gold. The exploration stage asset is found near well-established infrastructure and is open for expansion. Preliminary hydrometallurgical studies have demonstrated the potential for recovering saleable cobalt and copper concentrates.
Cobalt Ridge and Mount Dorothy, known collectively as the Mount Isa projects, expand Global Energy’s Australian cobalt footprint to 2,560 hectares, creating a district-scale exploration and development opportunity.
Elsewhere on Thursday, Electric Royalties chief executive and director Brendan Yurik highlighted that the deal represents its first acquisition of cobalt royalties.
“[We} are extremely encouraged by the potential Millennium has in becoming a source of critical material needed to feed the electric revolution,” he added.
Thursday’s news comes just a week after Global Energy unveiled its plans for developing its nickel/cobalt projects near Tesla’s Gigafactory in Nevada. The firm hopes to complete an interpretation of work at the Lovelock and Treasure Box assets this year before carrying out 3D modelling and an inaugural drill program, and earning-in to an 85% interest in the assets.
Lovelock is said to have produced 500ts of mineralisation between 1883 and 1890 when it was last in operation. Global Energy believes exploration work and modern drilling techniques could unlock a large amount of potential value at the site.
Treasure Box, meanwhile, sits adjacent to Lovelock and hosts mine workings from limited copper production, which occurred until early into the 20th century. A historical diamond drill hole at the asset reportedly intersected 1.52% copper over 85 feet, with mineralisation beginning at the surface.
Author: Daniel Flynn
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