Global Energy Metals Corp (TSX-V:GEMC) (GEMC) has announced the signing of a binding asset purchase and sale agreement with High-Tech Metals Ltd to sell its interest in the Werner Lake cobalt project for a cash and share consideration.
High-Tech is a private Australian company that is planning to list its shares on the ASX this year. Currently, GEMC holds a 70% interest in Werner while Marquee Resources Ltd holds a 30% interest.
In a statement, Mitchell Smith, president and CEO of GEMC commented: "We are pleased to increase value for our shareholders, without dilution, through the monetization of a non-core asset as part of our ongoing strategy of building investment exposure to technology enabling metals essential to an electrified future. The Werner transaction with High-Tech is another demonstration of the realization of this business model. We look forward to becoming shareholders of High-Tech and participating in the exploration success of the project through the public entity upon its proposed listing on the ASX."
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At the closing of the sale, GEMC is expected to hold 7.87% in High-Tech after the Australian firm raises $4.5 million as part of its IPO on the ASX. The funds raised will be used to list on the ASX, advance exploration of the Werner Lake project, identify additional opportunities to grow the company, and for general corporate and working capital purposes.
Sonu Cheema, managing director of High-Tech added: "The world needs more high-quality cobalt mines and High-Tech is committed to begin work to realize the potential of Werner in a sustainable and responsible manner to ensure strong outcomes for all stakeholders. High-Tech is currently on the path to IPO with Werner as our first project focused on EV metals in tier-1 jurisdictions, with the aim to list by the end of 2022."
The sale agreement provides, among other things, that the aggregate purchase price shall be A$700,000 of which A$50,000 shall be paid to the company on execution of the agreement and the balance of which will be satisfied by the issuance of a total of 3,250,000 shares of High-Tech as to 2,500,000 consideration shares to GEMC and 750,000 consideration shares to Marquee.
The transaction remains subject to the satisfaction or waiver of customary closing conditions.
The Werner Lake Project is located near the Ontario-Manitoba border in the Kenora Mining District. The Werner Lake Geological Belt hosts numerous cobalt-copper and base metal showings, deposits and past-producing mines. The two largest cobalt deposits defined to date are the Werner Lake Minesite Deposit and the West Cobalt Deposit.
The area has seen extensive exploration and development work since the original discovery of cobalt in 1921. The Werner Lake Cobalt Mine produced cobalt ore in the 1930s and 1940s from the 'Old Mine Site' deposit area and with the discovery of the main ore area at the West Cobalt Deposit, was taken to production decision in the late 1990s. At the time, infrastructure was put in place, including four season road, mill buildings, and tailings settling area. Decline ramp, drifts and raises of over 258 metres were driven into the heart of the deposit.
Mineralisation remains open at depth and along strike with the potential for undiscovered high-grade zones. Metallurgical studies have shown that excellent cobalt recoveries can be yielded from a standard flotation mill process followed by a low-pressure oxidative hydrometallurgical leach (net recovery 88%), to produce a cobalt carbonate end product.
Contact the author at jon.hopkins@proactiveinvestors.com