Hammer Metals has announced a deal to divest 100% of its interest in two cobalt prospects near Mt Isa whilst retaining a 1.5% royalty. The deal with Global Energy Metals Corporation allows Hammer to direct its financial resources to its ongoing copper-gold exploration in the region, whilst Global Energy Metals will continue its efforts to build critical mass for a district-scale cobalt play in the region.
Hammer Metals is set to divest 100% of its interest in the Mt. Dorothy and Cobalt Ridge shear-hosted copper-gold-cobalt prospects in Queensland, to TSXV-listed Global Energy Metals Corporation (GEMC).
Pending fulfilment of certain conditions, including due diligence, receipt of regulatory approvals and approval by the TSXV, GEMC will have the right to acquire the two exploration permits, collectively known as the “Mt. Isa Projects” from Hammer.
The deal requires GEMC to pay Hammer CAD$80,000 cash upon signing and CAD$300,000 in shares after final TSXV acceptance of the transaction.
GEMC are then required to expend a minimum of CAD$1M over 2 years or pay a penalty payment of CAD$100,000 and CAD$250,000 in shares to Hammer.
Upon completion of an NI 43-101 compliant mineral resource report on either of the two projects, GEMC will issue Hammer with a further CAD$250,000 in shares. The companies have also agreed to a 1.5% net smelter royalty in favour of Hammer, for any mineral production from the Mt. Isa Project tenements.
Any ordinary shares issued by GEMC to Hammer during the transaction are subject to a contractual lock-up period of 12 months following issue, during which time the shares may not be transferred.
Additionally, Hammer will manage the Mt. Isa Project for a minimum of 12 months and receive an agreed 10% management fee for its services.
Alex Hewlett, Managing Director of Hammer Metals said: “We are very pleased to be strengthening our partnership with GEMC and combining efforts to build a new cobalt camp in the Mt. Isa mining district. This strategic alliance offers shareholders of both companies extensive possibilities for growth and aligns well with Hammer’s strategy by leveraging our infrastructure and proven operational expertise that will be key in furthering the exploration and development potential in this important cobalt rich region.”
Mitchell Smith, President & CEO of GEMC commented by saying; “Our alliance with Hammer provides greater depth to our exploration efforts in the region and allows for the defining of a new district-scale cobalt camp. The need to source non-conflict future supply of cobalt as feed to the growing demand being fuelled by the surge in production of electric vehicles and battery based consumer electronics has become very apparent. This building of a cobalt camp in Australia is a step closer to supply diversification that will further unlock and enhance value for our shareholders and strategic downstream partners.”
The deal mirrors a similar one completed between the parties for the Millenium cobalt project in May 2017. That deposit has a current mineral resource estimate of 3.07 million tonnes grading 0.14% cobalt, 0.32% copper and 0.11 g/t gold.
Under the terms of the 2017 deal, GEMC can earn up to 75% of five granted mining leases by spending up to CAD$2.5M on exploration at the project over 36 months with staged payments of CAD$250,000 to Hammer. The company will operate the JV until GEMC earns a 65% interest in the project, before relinquishing control to them.
The recent deals allow GEMC to concentrate its efforts on building a large scale cobalt play in the Mt. Isa district with residual benefits to flow to Hammer and for Hammer to direct its financial resources to ongoing copper-gold exploration activities in the same region.
A good outcome for both players.