VANCOUVER (miningweekly.com) – Junior explorer First Cobalt has signed a letter of intent with an associate of Madini Minerals to form a strategic alliance and earn a controlling interest over seven prospective copper/cobalt exploration properties covering 190 km2 in the Democratic Republic of the Congo (DRC), the company announced Monday.
London Metals Exchange cobalt prices have jumped about 60% so far this year to more than $55 000/t, sparking frenzied activity among explorers to get a foot in the door to capitalise on the widening supply gap.
The Toronto-based company framed the development as representing a low-risk entry point into the world’s most important cobalt jurisdiction, extending the portfolio beyond the existing Keeley-Frontier mine option, in Canada.
“Identifying the right mineral properties in the DRC is a key part of our strategy to grow our global portfolio of cobalt properties. The DRC accounts for over 60% of global cobalt production and we see significant exploration upside in the country. This transaction will allow First Cobalt to firmly establish a presence in one of the richest mining camps in the world,” president and CEO Trent Mell stated.
Under the letter of intent, First Cobalt will become a 70% joint venture partner on each of the seven properties, providing it access to a substantial land package totalling 190 km2 on the Central African Copperbelt, in Katanga, all with known surface mineralisation.
Further, Madini will have an 8.5% ownership interest of First Cobalt and will appoint Congolese engineer Serge Ngandu to the First Cobalt board.
Madini will act as First Cobalt’s operator on all seven properties. First Cobalt believes Madini has extensive experience running exploration programmes in Africa, as well as strong in-country relationships. Exploration plans and budgets will be jointly prepared by Madini and First Cobalt, with approval to come from a joint exploration committee. First Cobalt will have final approval on the budget proposed by the committee as the sole provider of the exploration funding. First Cobalt will have a right of first refusal over other Madini interests in the DRC.
As consideration for the options, First Cobalt will pay Madini associate JayBird Invest C$600 000 in cash and issue 4.53-million shares upon closing of the transaction. First Cobalt will pay C$1.58-million in total to acquire the 70% interest over all seven properties. There are no minimum yearly spending requirements and the 30% partners each have a free-carry until completion of a feasibility study.
The partners still need to complete definitive documentation and confirmatory due diligence is expected to be completed within the next four weeks.
Meanwhile, Mell added that the company expects to announce the work plan for the Keeley-Frontier mine, in northern Ontario, soon, as it moves forward with its strategy to provide focused leverage to the cobalt market.