Influential battery metals pioneer Global Energy Metals (TSX-V:GEMC) has inked a deal to sell its entire 70% stake in a key Canadian mining resource to ethical cobalt specialists CBLT Inc. (TSXV: CBLT).
GEMC’s sale of its total interest in the Werner Lake project provides the company with immediate cash while retaining useful exploration upside through a stake in CBLT.
Under the terms of the deal, GEMC receives a $20,000 non-refundable deposit and 5 million CBLT shares worth $250,000 issued at $0.05/share. Global Energy Metals will also receive 3.5 million CBLT warrants, each exercisable at $0.08 per share with a two-year term. The equity stake in CBLT represents 11% of the miner’s share capital. GEMC CEO Mitchell Smith said the move “will strengthen GEMC’s equity portfolio holdings of battery mineral focused peers”.
GEMC will also get a royalty payment of $500,000 in cash upon Werner Lake reaching commercial production.
The cobalt resource consists of 102 patented mineral claims in one of Ontario’s key mining districts. Historically the mine has produced 143,386 pounds of cobalt at a 2.2% grade.
GEMC has previously partnered with ASX-listed Marquee Resources (ASX:MQR) at Werner Lake. Marquee reportedly intersected high-grade cobalt mineralisation from numerous diamond drill holes.
If CBLT sells or options part of Werner Lake within two years, GEMC will also receive 20% of the gross proceeds.
Mitchell Smith believes that the global transition to net zero energy — powered by the massive growth of rechargeable batteries — is potentially one of the biggest commercial opportunities of this generation.
As such the GEMC CEO has been furiously building and maximising shareholders’ exposure to the battery metals supply chain. Sales like this, while retaining strong exposure to mining upside has positioned the company for long-term growth, too.
It’s likely why Vancouver-based institutional equity researchers Fundamental Research Corp rate the stock a buy, with forecast near-term upside of 63.6% from today’s $0.28 share price.
“This transaction will provide GEMC’s shareholders exposure to CBLT’s potential future growth through a meaningful equity stake in a resource-focused company that is accelerating battery and precious metals exploration efforts in Ontario, Canada,” Smith noted.
Auto goes electric
As ever more automotive giants spend increasingly huge amounts of capital into moving their fleets to electric, the spotlight is shining ever brighter on battery metals.
As CNN Business described on the launch of the Audi e-tron: “The great electric car race is just beginning. Thirty-six shoebox sized battery modules, each containing a dozen lithium ion cells are packed into 7ft-long electric battery packs and slung under the floor of each SUV.”
What powers those shoebox-sized lithium-ion batteries? Critical metals like cobalt. That is Global Energy Metal’s prime focus and its greatest benefit.
And the stakes? “Failure [for Audi owner Volkswagen] could signal the end for a company with an annual revenue of $265 billion.”
The consequences, too, for governments and policymakers who fail to find solutions to rapid climate change will be dire. So, it’s clear that battery metals represent a key growth area for the trillion-dollar automotive sector, along with a potential salve for renewable energy enthusiasts.
In recent months, GEMC has positioned itself strongly for growth.
In August 2020, the firm tidied up its corporate structure with a 10-for-1 share consolidation.
Then, a month later, it raised $659,000 in an oversubscribed private placement to take an 85% stake in Treasure Box and Lovelock. These are two key Nevada cobalt, copper and nickel projects on the doorstep of Tesla’s giant lithium-ion Gigafactory 1.
New magnetic data results from Lovelock in November 2020 showed the rocks that host known metal deposits extend 2.5km beyond the previously thought zone, with 18 clustered magnetic high anomalies potentially reflecting resources from the surface to 150 metres deep. Eight drill holes have now been proposed for GEMC’s first exploration.
Author: Mark Sheridan