District Metals Corp said it has executed a definitive purchase agreement with a wholly-owned subsidiary of EMX Royalty Corp to acquire full ownership of the polymetallic Svärdsjö Property in the Bergslagen District of Sweden.
The property is 200 kilometers (km) northwest of Stockholm, in an area that hosts two mines: Boliden's Garpenberg mine and Lundin Mining's Zinkgruvan mine.
Once the deal is finalized, District Metals will continue to focus on its advanced exploration stage Tomtebo property also situated in the Bergslagen Mining District.
READ: District Metals continues to intersect significant polymetallic mineralization at Tomtebo
"Since acquiring our flagship Tomtebo Property in June 2020 our belief in the potential to discover a significant high-grade polymetallic deposit in the Bergslagen District has only increased. Over the past year, we have been reviewing numerous properties to complement the Tomtebo Property as part of our corporate objective to become a dominant exploration and development company in the Bergslagen District,” Garrett Ainsworth, CEO of District said in a statement.
He went on to note: “The addition of the Svärdsjö Property is highly accretive to our property portfolio as it is an advanced stage exploration property with several historic mines and occurrences that show high-grade polymetallic targets similar to our Tomtebo Property. It is a pleasure to enter into our second property acquisition in the Bergslagen District with our partner EMX."
Like Tomtebo, Svärdsjö is also an advanced stage exploration property that covers an area of 1,037 hectares. Svärdsjö is located 25km to the north of the Tomtebo Property, and contains similar host rocks, structure, alteration, and mineralization styles as the Garpenberg Mine, Historic Falun Mine and the Tomtebo Property.
Mining activities in the area date back to the 14th century, and records show that the historic Svärdsjö Mine (1887-1989) produced 1.03 million tons at 112 grams per ton (g/t) gold, 6.0% zinc, 2.7% lead, 0.6% copper and 0.4 g/t silver.
Mining at the historical Svärdsjö Mine reached a depth of 390m where mineralization appears open at depth and along strike. Operations at Boliden's Garpenberg Mine and Lundin Mining's Zinkgruvan Mine are currently at depths of 1,400m and 1,300m, respectively.
District Metals has agreed to make a cash payment of $35,000 to EMX and will issue EMX 1,659,084 common shares of District Metals, which represents an increase in equity ownership for EMX, who will now own 9.9% of District on a non-diluted basis.
District will also need to spend $1 million on eligible expenditures on the Svärdsjö Property within five years of the closing of the proposed transaction, including at least $150,000 in expenditures per year. The company must also complete a minimum of 3,500m of drilling within five years of the closing of the proposed transaction.
The new owner has also agreed to grant EMX a 2.5% net smelter return (NSR) royalty on the Svärdsjö Property, subject to an option to repurchase up to 0.5% of the royalty for $2,000,000 at any time within six years of the transaction closing.
Contact the author at georgia@proactiveinvestors.com