First Cobalt Corp (CVE:FCC) (OTCQX:FTSSF) (FRA:18P) said it has completed its transaction to sell a portion of its exploration assets in the Canadian Cobalt Camp to Kuya Silver Corporation, as well as to form a joint venture to advance the remaining mineral assets.
First Cobalt noted that Kuya Silver has acquired a 100% interest in the properties, which are located in the historic Kerr silver district, in consideration for a payment of $4 million, comprising of $1 million in cash and 1,437,470 Kuya common shares.
“The transaction with Kuya allows us to advance our strategy of producing the world's most sustainable cobalt. Our priorities are to recommission our Canadian refinery to produce cobalt sulfate by late 2022 and to resume drilling at our flagship cobalt-copper project in Idaho,” First Cobalt CEO Trent Mell said in a statement.
READ: First Cobalt Corp fully focused on creating a North American cobalt supply chain
Mell added: “This transaction creates value for shareholders with a prospective asset that we do not have the bandwidth to progress due to our focus on our more advanced assets. We are proud to be partnering with Kuya, as a shareholder and as a joint venture partner, to build upon First Cobalt's previous exploration work in a historic world-class silver and cobalt mining camp.”
Kuya Silver also has an option to earn a 70% interest in the remainder of First Cobalt's Ontario land package over the next six months by making an additional payment of $1 million, with further payments required to reach the 70% interest level.
First Cobalt noted that Kuya will make a milestone payment of $2.5 million upon completion of a maiden mineral resource estimate of at least 10 million silver equivalent ounces on either of the Kerr assets or the remaining assets, with the payment increasing to $5 million should the resource exceed 25 million silver equivalent ounces.
As well, First Cobalt said it will spend $1 million of the flow-through proceeds it raised in August 2020 on eligible expenditures, split equally between the Kerr assets and the remaining assets.
It added that it will have a right of first offer to refine base metal concentrates produced at First Cobalt's refinery as well as a back-in right for any discovery of a primary cobalt deposit on the remaining assets.
First Cobalt is focused on creating a North American cobalt supply chain through both exploration and refining. The company is the owner of North America’s only permitted cobalt refinery located in Ontario, Canada, which could produce over 25,000 tonnes of cobalt sulfate per year from third party feed.
Contact Sean at sean@proactiveinvestors.com