Talon Metals Corp. (TSX:TLO) revealed that it has struck an option and earn-in agreement with UPX Minerals Inc, a wholly owned subsidiary of Sweetwater Royalties, to acquire up to an 80% ownership interest in the mineral rights over a 400,000-acre land package in the Upper Peninsula of the US state of Michigan.
The Tamarack, Minnesota-based company said the “highly prospective terrain” is within 1.7 miles of the high-grade Eagle Nickel Mine, which is the only active US nickel mine. It is also only 0.4 miles from the Humboldt Mill, the concentrator which currently processes the raw nickel ore that is trucked from the Eagle Nickel Mine.
Talon said the deal comes with a “very large high quality geophysical data package” and access to historic drill core that contains multiple high-grade nickel intercepts up to 7.4% nickel (Ni), which is similar grades to the company's Tamarack Nickel project in Minnesota. The parcel of land was originally assembled by Henry Ford and owned for 70 years by the Ford Motor Company.
In a statement, Sweetwater Royalties CEO Johnny DeCooman said: "After a competitive exploration partner search, we selected Talon's proposal due to their track record for delivering exploration success. The Talon team have extraordinary in-house geophysics, geology, and drilling capabilities to advance several targets as already demonstrated by their success at the Tamarack Nickel project in Minnesota.”
Meanwhile, Talon CEO Henri van Rooyen noted the firm’s acquisition was “directly responsive” to the call from Senator Manchin and other national leaders on both sides of the aisle, who have advocated for a battery mineral supply chain in America.
"The US currently has only two known high-grade nickel deposits: Talon's Tamarack Nickel project in Minnesota and the Eagle Nickel Mine in Michigan. These two exceptional deposits of high-grade nickel are definitive proof of the nickel potential in the Lake Superior region,” added van Rooyen. “Talon's experienced team of 'nickel hunters' have the benefit of technologies only dreamed of prior to 2020: new technologies mean faster data collection, processing, interpretation and drilling, culminating in the ability to generate and test a much larger number of high priority targets simultaneously."
Talon will explore for new high-grade nickel, iron, and copper deposits in the Upper Peninsula of Michigan.
Terms of the agreement
In exchange for the option agreement with UPX to acquire up to an 80% ownership stake in the Michigan Nickel properties, Talon has agreed to a minimum spend of up to US$5 million in exploration expenditure or drilling at least 7,500 meters (m).
Talon has five years until August 2027 to complete the minimum requirements and will earn a 51% undivided interest in the properties on the completion of 25,000m of drilling.
Talon will then have the option to earn an additional 29% interest in the Michigan Nickel properties resulting in an 80% ownership interest on delivering a Feasibility Study. If it does not complete the Stage Two requirement within eight years which may be extended in certain circumstances, Talon's interest will revert to 49%.
On execution of the option agreement, Talon will issue Kennecott Exploration Company 15,321,933 common shares at $0.51 per share in satisfaction of US$6 million plus interest in payment obligations of UPX to Kennecott as a previous owner of the Michigan Nickel properties.
On Talon completing the Stage Two requirement, UPX will be granted a 2% net smelter return (NSR) royalty on the properties and will have the right to participate in proportion to its participating 20% joint venture interest or dilute its interest to an additional 1% NSR royalty, said the company.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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