TORONTO, Dec. 21, 2020 /CNW/ - First Cobalt Corp. (TSXV:
FCC) (OTCQX: FTSSF) (the "Company") is pleased to announce that it
has entered into a letter of intent with Kuya Silver Corporation
("Kuya") to sell a portion of its silver and cobalt mineral
exploration assets in the Canadian Cobalt Camp and form a joint
venture to advance the remaining mineral assets. The transaction
will allow the two companies to resume mineral exploration
activities in a historic silver district while providing First
Cobalt capital for the recommissioning of its Canadian
refinery.
Key terms of the transaction are as follows:
- Kuya will pay $4 million on
closing for a 100% interest in the Kerr area properties (the "Kerr
Assets", see Figure 1), comprised of $1
million in cash and $3 million
in Kuya common shares
- Kuya will pay an additional $1
million in cash or shares within 6 months of the acquisition
of the Kerr Assets should it elect to exercise an option to earn up
to a 70% interest in First Cobalt's remaining Cobalt Camp assets
(the "Remaining Assets")
- The option to acquire an interest in the Remaining Assets can
be exercised by Kuya by satisfying the following earn-in
conditions: 50% interest by incurring $2
million in expenditures and making a payment to First Cobalt
of $300,000 in year 1; 60% interest
by incurring $1 million in
expenditures and a payment of $350,000 in year 2; and 70% interest by incurring
$1 million in expenditures and a
payment of $350,000 in year 3
- Kuya will make a milestone payment of $2.5 million in cash or shares 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. The payment increases to $5
million should the resource exceed 25 million silver
equivalent ounces.
- First Cobalt 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
First Cobalt shall 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.
The parties intend to complete the transaction in Q1 2021, at
which point Kuya will own the Kerr Assets outright. The companies
will form a 70-30 joint venture on the Remaining Assets if and when
all of the conditions outlined above are satisfied. The partnership
with Kuya demonstrates the Company's commitment to creating value
for its shareholders as it continues to focus on cobalt.
Cormark Securities Inc. is acting as advisor to First Cobalt in
connection with this transaction. Completion of the transaction
remains subject to negotiation of definitive documentation between
the companies.
Trent Mell, President & Chief
Executive Officer, commented:
"This transaction will provide capital to advance the First
Cobalt refinery project while we advance a larger debt financing
solution. The electric vehicle landscape is moving quickly and
proceeds from this transaction will allow us to remain on schedule,
while reducing dilution.
Equally important is the partnership that we are forming with
Kuya to continue advancing a one-of-a-kind Canadian silver and
cobalt district. First Cobalt has
spent a considerable amount of time consolidating this historic
high-grade mining district and has made great strides towards
reviving what was once a world class silver and cobalt mining camp.
Kuya's leadership team has tremendous experience with high grade
silver deposits and we look forward to working with them on these
coveted assets."
The Cobalt Camp
First Cobalt holds the largest
land package in the historic silver-cobalt mining camp of
Cobalt, Ontario, with more than
10,000 hectares and over 50 of the more than 100 past-producing
mines, including some of the region's largest high-grade silver
producers. The Company invested $10
million in an extensive exploration program that included
creating a proprietary 3D geological model based on digital
compilation of historic mine workings, integrated with exploration
drilling and surface bedrock geology maps.
Over 600 million ounces of silver and 50 million pounds of
cobalt were mined in the district along with copper and nickel over
a 60-year period. Peak production occurred from 1919 to 1931.
Exceptionally high-grade vein-style, native silver mineralization
was mined at up to 185 oz/t Ag (5,200 g/t Ag) from surface and
underground.
The Kerr Assets include eight historic silver mines on a
contiguous 900-hectare area: Crown Reserve, Kerr Lake, Lawson, Drummond, Conisil, Hargrave, Silver Leaf,
Bailey. These mines produced over 50 million ounces of silver and
900,000 pounds of cobalt, mainly between 1905 to 1950. The deepest
shaft was less than 200 metres. Also included in the Kerr Assets is
the nearby Silverfields property, which was mined by Teck until
1989 to a depth of 300 metres, producing over 17 million ounces of
silver, demonstrating the depth potential to some mineralized
systems.
In 2017-18, the Company completed 253 shallow drill holes for
over 35,000 metres on 12 target areas across the Camp. The focus at
that time was to identify near-surface cobalt-silver mineralization
amenable to open pit mining. Numerous bonanza grade intercepts were
encountered during that initial campaign that warrant follow
up.
The Company's prior exploration drilling at Kerr has yielded
very promising drill results, including 1,442 g/t silver and 0.28%
cobalt over 2.5 metres, 820 g/t Ag and 0.45% Co over 3.6 metres and
515 g/t Ag and 0.61% Co over 2.2 metres. Drilling intersected
mineralized vein networks within distinct zones. The first zone is
over a 500m strike length
corresponding with the historic Crown Reserve, Lawson, and
Kerr Lake mines. Approximately
400m to the south, a second
mineralized zone was identified that runs parallel and extends for
over 350m in strike length. Further
drilling near Drummond intersected
cobalt-silver mineralization across an area of 200m by 300m
separate from these zones. Within these three zones, mineralization
occurs as several intersecting cobalt-silver veins controlled by
regional structures. Continuity of mineralization has yet to be
determined, but intersection widths and grades show the potential
for either underground or open pit resources remains.
The Remaining Assets cover more than 9,000 hectares and include
historic mines within the Silver Centre area where exploration
drilling intersected new cobalt-silver veins that remain to be
fully tested. A new conceptual model for mineralization based on
the Kerr area led to identifying other prospective areas in the
Cobalt Camp. Certain areas within Cobalt Central are geologically
similar to the Kerr area but have been under-explored due to poor
bedrock exposure and the extent of Nipissing Diabase cover over the
prospective sedimentary and volcanic rocks. Both the Schumann Lake
and Caswell areas are considered highly prospective for
mineralization below cover. At Schumann Lake, minor reconnaissance
drilling has been completed by the Company based on new structural
interpretations of surface mineralization showings as well as
geophysical and geochemical surveys. Positive results in the
western portion of the Schumann Lake area are encouraging for
future follow-up work.
About Kuya Silver Corporation
Kuya is a Canadian–based silver–focused mining company that owns
the Bethania Project, which includes the Bethania mine, located in
Central Peru. The Bethania mine
was in production until 2016, toll–milling its ore at various other
concentrate plants in the region, the Company's plan is to
implement an expansion and construct a concentrate plant at site
before restarting operations. The Bethania mine produced
silver–lead and zinc concentrates from the run of mine material,
until being placed on care and maintenance due to market conditions
and lack of working capital.
About First Cobalt
First Cobalt owns North America's only permitted cobalt
refinery. Cobalt refining is a
critical component to the development and manufacturing of
batteries for electric vehicles and forms a foundational piece of
the next generation of the North American auto sector and other
electrified consumer and industrial applications. First
Cobalt owns the Iron Creek
cobalt-copper project in Idaho,
USA and controls significant silver and cobalt assets in the
Canadian Cobalt Camp, including more than 50 past producing
mines.
Qualified Person Statement
Dr. Frank Santaguida, P.Geo., is
the Qualified Person as defined by National Instrument 43-101 who
has reviewed and approved the contents of this news release. Dr.
Santaguida is employed as Vice President, Exploration for First
Cobalt.
On behalf of First Cobalt Corp.
Trent Mell
President & Chief Executive Officer
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy
of this release.
Cautionary Note Regarding Forward-Looking
Statements
This news release may contain forward-looking statements and
forward-looking information (together, "forward-looking
statements") within the meaning of applicable securities laws and
the United States Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, are
forward-looking statements. Generally, forward-looking statements
can be identified by the use of terminology such as "plans",
"expects', "estimates", "intends", "anticipates", "believes" or
variations of such words, or statements that certain actions,
events or results "may", "could", "would", "might", "occur" or "be
achieved". Forward-looking statements involve risks, uncertainties
and other factors that could cause actual results, performance and
opportunities to differ materially from those implied by such
forward-looking statements. Factors that could cause actual results
to differ materially from these forward-looking statements are set
forth in the management discussion and analysis and other
disclosures of risk factors for First Cobalt, filed on SEDAR at
www.sedar.com. Although First Cobalt believes that the information
and assumptions used in preparing the forward-looking statements
are reasonable, undue reliance should not be placed on these
statements, which only apply as of the date of this news release,
and no assurance can be given that such events will occur in the
disclosed times frames or at all. Except where required by
applicable law, First Cobalt disclaims any intention or obligation
to update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
SOURCE First Cobalt Corp.