Kuya Silver Corp. [KUYA-CSE] has given notice of intention to exercise an option to earn a 70% interest in all of First Cobalt Corp.’s [FCC-TSXV; FTSSF-OTCQX] remaining mineral rights in the Canadian Cobalt camp in northeastern Ontario.
Kuya previously acquired a 100% interest in a property package surrounding the Kerr Lake area for $4 million. Kuya also received a six-month option to earn up to a 70% interest in First Cobalt’s remaining Cobalt camp assets for an additional $1 million in cash or Kuya shares
The option has been exercised by Kuya by issuing 671,141 common shares at a 20-day VWAP (Volume Weighted Average Price) of $1.49. Over a 3-year earn-in period, Kuya will be required to make $1 million in additional payments to First Cobalt and invest $4 million in exploration activities. A $2.5 million milestone payment is triggered upon completion of a maiden mineral resource estimate of at least 10 million silver equivalent ounces on either of the Kerr Lake area assets. The payment increases to $5 million should the resource exceed 25 million silver equivalent ounces
First Cobalt retains a right 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, said, “This option agreement allows us to focus on our strategy of producing the world’s most sustainable battery materials for the EV market. Our primary focus is to commission our Canadian hydrometallurgical refinery in Q4 2022 and advance exploration activities at our Iron Creek cobalt-copper project in Idaho.
“As Kuya builds upon the work we completed in 2017 and 2018, our shareholders will benefit from their success through milestone payments and a 30% interest in the resulting joint venture. The Kuya team’s strong technical skills is suited to the style of mineralization in the Cobalt Camp. We are keen to see exploration results in historically underexplored areas of this silver-cobalt district, including known targets such as the Schumann Lake area.”
First Cobalt holds the largest land package in the historic silver-cobalt mining camp of Cobalt, Ontario, with more than 10,000 hectares and several past-producing mines, including some of the region’s largest high-grade silver producers.
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.