Global Energy Metals (TSXV:GEMC | OTC:GBLEF | FSE:5GE1) recently announced major strides forward at its Millennium project in Australia thanks to a new agreement with Metal Bank (ASX: MBK).
The two firms signed a binding term sheet for a six-month exclusive option for Metal Bank to earn-in and joint venture (“JV”) the cobalt-copper-gold project.
Millennium’s inferred 2012 JORC resource is 5.89 million tonnes at 1.08% copper equivalent, from its five granted mining leases. However, as the company noted, there is “significant potential for expansion”.
Mitchell Smith, GEMC’s chief executive, praised the deal in an interview with Mining Maven.
According to Smith, Metal Bank is “very keen to see Millennium advanced and developed in a tight timeframe”, creating a substantially larger project.
A rich history
Millennium is based in Queensland, Australia in the Mount Isa region – only 19km from the Rocklands copper-cobalt project and refining capacity. Rocklands hosts an impressive 55.4 million tonnes of resources grading 0.64% copper, 0.15 grams per tonne of gold, and 290 parts per million cobalt (0.90% copper equivalent).
Not only does the area contain a lucrative nearby project, but Smith noted that Queensland is a “great mining jurisdiction”. He said the Mount Isa region has “an extensive history of mining” with good infrastructure and access to labour. Mount Isa is also “in close proximity to rail and port to some of the biggest end user groups, being in Asia”.
In 2018, Global Energy completed a ten-hole, 1,141m drilling campaign that confirmed historical cobalt mineralisation estimates previously completed by Hammer Metals in 2016.
This programme duplicated historical results and demonstrated continuity between the previously reported high-grade cobalt zones indicating wide zones of cobalt mineralisation near surface and at depth with assay results indicating metal grades exceeding prior expectations. At the same time, it also determined that mineralisation continues to depth, including 28m at 0.35% copper and 0.2% cobalt.
In fact, testing encountered cobalt and copper mineralisation along the entire 1,500m targeted strike length with zones open in all directions.
With that in mind, GEMC and Metal Bank have agreed the next logical steps for Millennium.
A clear plan of action
The deal between the two companies has four stages. The first involves a six-month exclusive option period for Metal Bank to conduct due diligence.
By paying A$10,000, Metal Bank has right of exclusivity from the term sheet date to June 30. This right of exclusivity extends through the option period after the option agreement is signed.
Metal Bank will also undertake an initial exploration programme in that first phase in order to confirm Millennium’s mineralisation potential. This work programme includes geological mapping and reconnaissance drilling for up to four reverse circulation (“RC”) holes.
Phase two will see Metal Bank earn a 51% project interest by issuing A$250,000 of its stock to GEMC and solely funding $1 million in exploration expenditure.
This includes multiple tests across different project areas, including two deep down dip extension test holes and six resource infill holes at Millennium Resource. There will also be fourteen holes drilled at Millennium North and up to four RC holes on the Federal/Corella Trend.
In the third phase, Metal Bank can earn a further 29% interest through the issue of A$350,000 in its own shares and funding A$2 million, giving it an 80% total interest. Work programmes in this phase includes a Millennium Resource upgrade, updated mineral resource estimate, and the start of a feasibility study.
Finally, in phase four, GEMC can elect to require Metal Bank to buy out its final 20% interest in exchange for further shares, to be agreed. Otherwise, the two parties will fund expenditures in proportion to their interests.
Phase four’s work programmes include completing a bankable feasibility study, obtaining development approvals, development, and mining.
Included in the term sheet is a buy-out option at the end of the second phase, letting Metal Bank acquire the 29% for $1.5 million in shares and A$1 million in cash before moving immediately to phase four.
A meeting of minds
Smith highlighted the “added exposure to Metal Bank”, calling it “a growing company” and a “strong opportunity” with a “good portfolio”. With this deal, GEMC’s shareholders can maintain Millennium exposure and gain a strong new partner at the same time.
Asked about the benefits of having Metal Bank on board, Smith highlighted the impressive board and management.
“The people at Metal Bank, first and foremost, are exceptional. They have a very strong track record and we see a strong opportunity to work with them,” Smith said.
For example, Metal Bank executive chair Inés Scotland has spent more than 20 years in the mining industry. She was recently chief executive of listed, $500 million market cap company Ivanhoe Australia.
Scotland’s background includes time as managing director and chief executive of Citadel Resource Group. At the time of Citadel’s 2011 acquisition by Equinox Minerals, it had a $1.3 billion market cap and was developing Saudi Arabia’s Jabal Sayid copper project.
Guy Robinson, executive director at Metal Bank, has more than 30 years of experience as chief financial officer, company secretary, and director. This includes time as chief financial officer/general manager of finance Jardine Lloyd Thompson, Colliers International, and Franklins.
Meanwhile, company secretary and executive director Sue-Ann Higgins has worked in the mining industry for more than 25 years, which includes senior and legal commercial roles at Citadel, as well as ARCO Coal Australia, Oxiana, and WMC Resources.
Smith commented that Metal Bank’s “very strong team” has been “serially successful in the past” and is looking for another success in Millennium. He said GEMC is “definitely very keen to be partnering with them”.
A chance to advance
This agreement is a great opportunity for GEMC, where the core focus has been on projects in North America, specifically in Nevada and—now—Idaho following a recent acquisition in the state.
Now, the firm can see Millennium advanced when it “wasn’t expecting to be able to”, allowing for more widespread project development.
The deal allows GEMC to make the most of the ongoing green revolution, which is causing increased demand for the cobalt and copper contained within Millennium.
Both of these play key roles in electric vehicles (“EVs”). Cobalt is a key component in EV batteries, while copper is important for the motors, batteries, and wiring. In fact, EVs use twice the copper of a traditional internal combustion engine vehicle.
With its Australia project advancing, and other battery metals projects elsewhere, the company is in a better position than ever to capitalise on the electrification movement.
Author: Anna Farley
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