Cobalt 27 adds lithium royalty to portfolio

The Mount Marion lithium mine in Western Australia. Source: Mineral Resources Ltd.

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The Mount Marion lithium mine in Western Australia. Source: Mineral Resources Ltd.

Cobalt 27 Capital Corp. [KBLT-TSXV; 270-FSE] said Monday January 7 that it has boosted its portfolio by acquiring a lithium royalty on the producing Mount Marion Lithium Mine in Western Australia.

The royalty being acquired consists of 1.5% of gross revenues and AUD$2 per tonne of ore mined under the Reed Industrial Minerals Pty Ltd. sub-lease agreement held by Westgold Resources Ltd. on the Mount Marion Mine.

Cobalt is acquiring the royalty from Westgold and will pay $240,400, plus 200 tonnes of physical cobalt metal to be delivered to a LME-bonded warehouse of Westgold’s choice.

Cobalt 27 shares advanced on the news, rising 2.87% or $0.12 to $4.30. The shares are trading in a 52-week range of $14 and $3.36.

Cobalt 27 Capital is a leading battery metals streaming company, offering exposure to metals integral to key technologies of the electric vehicle and energy storage markets.

It is also the holder of the world’s largest stockpile of physical cobalt. The company owns 2,905.7 tonnes of physical cobalt and a 32.6% stream on the Vale SA’s [VALE-NYSE] Voisey’s Bay nickel mine in Labrador. Acquisition of the lithium royalty is being largely funded by a small percentage (7%) of Cobalt 27s existing holdings of cobalt.

“We are committed to becoming a proxy for the large-scale transition to battery-based electric vehicles and energy storage systems. We are also intensely focused on accelerating near-term cash flow from battery metals streams and royalties,” said Cobalt 27 Chairman and CEO Anthony Milewski.

Brines (in salt ponds) and spodumene (hard rock) represent the two main sources of commercial lithium production.

The producing Mount Marion lithium mine has the world’s second largest high-grade lithium concentrate – spodumene reserves. Production of lithium concentrate from the open-pit mine began in early 2017. Spodumene is the hard rock mineral of lithium ore, as opposed to lithium brines in salt lakes.

“This transaction diversifies our portfolio of battery metals into lithium and exemplifies our core strategy of solidifying Cobalt 27 as a leading battery metals streaming and royalty company,” Milewski said.

The Mount Marion lithium mine is jointly owned by one of China’s largest lithium producers, Jiangxi Ganfeng Lithium Co. Ltd. (43.1%), Mineral Resources Ltd. [MIN-ASX] (43.1%) and Neometals Ltd. [NMT-ASX] (13.8%).

News of the lithium deal comes after Cobalt 27 recently announced the friendly acquisition of Australian Securities Exchange-listed Highlands Pacific Ltd. [HIG-ASX] in a $96 million transaction.

Highlands’ primary assets include an 8.56% stake in the producing Ramu Mine and a 20% interest in the Frieda River copper-gold project. Both are located in Papua New Guinea.

Ramu is a large scale nickel-cobalt mine with estimated reserves of one billion pounds of nickel and 100 million pounds of cobalt. Ramu exceeded annual production projections in 2017, reporting net cash flow of US$170 million on production of 34,666 tonnes of contained nickel and 3,308 tonnes of contained cobalt.

Ramu produces 3% of annual global mined cobalt as a by-product has an estimated mine life of 30 years.

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