First Cobalt Corp. [FCC-TSXV; FTSSF-OTCQX] completed its transaction with Kuya Silver Corp. [KUYA-CSE; MRRMF-OTCQB] to sell a portion of its exploration assets in the Canadian cobalt camp and form a joint venture to advance the remaining mineral assets. Kuya has acquired a 100% interest in the properties located in the historic Kerr silver district along with an option to earn a 70% interest in the remainder of First Cobalt’s Ontario land package.
Key terms of the transaction
Kuya acquired a 100% interest in the Kerr area properties for $4 million. Kuya may exercise an option to earn up to a 70% interest in First Cobalt’s remaining Cobalt Camp assets over the next six months, upon payment of an additional $1 million with further payments required to reach the 70% interest level.
Kuya will make a milestone payment of $2.5 million 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.
Trent Mell, President and CEO, commented: “The transaction with Kuya allows us to advance our strategy of producing the world’s most sustainable cobalt. Our priorities are to recommission our Canadian refinery to produce cobalt sulfate by late 2022 and to resume drilling at our flagship cobalt-copper project in Idaho.”
The $4 million payment received today (1Mar21) was comprised of $1 million in cash and 1,437,470 Kuya common shares. $500,000 of the cash consideration will be held in escrow pending completion of certain post-closing obligations. Future contingent payments described above may be paid in cash or shares, at Kuya’s election.