Primary Energy Metals has signed an arm’s length acquisition agreement with the shareholders of 1177527 B.C to acquire all the outstanding share capital of the latter.


Image: A copper native. Photo: courtesy of Native_Copper_Macro_Digon3.jpg: “Jonathan Zander (Digon3)"/ Materialscientist (talk)/Wikipedia.

In consideration for the acquisition, the Company will make a series of cash payments totaling $250,000 and will issue 20,000,000 common shares to the existing shareholders of 1177527. The Company will also assume a 2.0% net smelter returns (“NSR”) royalty on commercial production from the properties held by 1177527.

The NSR is owing to Contigo Resources Ltd., and one-half of it may be purchased at any given time in consideration for a cash payment of $1,000,000.

1177527 holds the rights to 39 mineral claims in various locations in the Province of Quebec totalling approximately

985.41 hectares (the “Hardy Project”).  The claims comprise a number of independent projects, as follows:

  • The Hardy and Nico Cobalt project claims are located approximately 250 km northwest of Baie Comeau, Quebec. Cobalt grades of 0.41%, 0.40%, 0.34%, 0.33%.
  • The Kwai, Coudon, and Boudrias Cobalt project claims are located in the Godbout, Quebec. Cobalt grades up to 0.084%.
  • The Muskrat and Perobonca – Begin Cobalt project claim are in the Lac Saint Jean area. Cobalt grades of 0.1022%, 0.1739%, 0.1408%
  • Champ Cobalt project is located Sherbrooke, Quebec. Several showings were identified with up to 10% sulphides and coincident magnetic anomalies. These provided results of up to 2.5% combined Cu + Ni, with showing #5 grading 1.93% Cu and 0.60% Ni.

Primary Energy Metals CEO and president Patrick Morris said: “We consider the Hardy Project in Quebec as a strategic investment that is the focus of management to enhance the value of the company for our shareholders.

“Primary will use its geotechnical team to assess historic data in developing an exploration plan that can effectively and efficiently define a potential resource. There is a massive demand for cobalt and the dynamics of sourcing an ethical supply is growing rapidly driven by the surge in the production of EV’s.”

Supply can tighten…

Chemical cobalt – the kind used in batteries, is expected to fall into a growing deficit over the next few years. By 2020, CRU expects that deficit to be at least 12,000 tonnes.

Cobalt prices have been rising, but they are nowhere near all-time highs yet.

All-time highs for cobalt prices happened in 2008, after the DRC government placed restrictions on export of ores and concentrates. For a brief stint, cobalt prices even exceeded $50/lb.

The current price? Roughly $26.06/lb.

Benchmark Minerals’ Andrew Miller said: “With this growth will come further disruption to the traditional market structures that have developed in cobalt over the last 30 years. In short, a new, more secure supply chain for the modern era will need to be created, a task that includes new mines, new refineries, and a more transparent supply chain.”

Completion of the transaction with 1177527 is subject to completion of filings with the Canadian Securities Exchange, and confirmation as to title to the Hardy Project.

Source: Company Press Release