Cobalt-focused Global Energy Metals is set to acquire a past-producing mine and project that are about 150 km from the gigafactory that electric vehicle manufacturer Tesla is building in Sparks, Nevada.
Global Energy, which already owns the Werner Lake cobalt mine in Ontario, Canada, and an earn-in agreement for the Millennium cobalt project, in Mount Isa, Australia, has entered into a nonbinding letter of intent (LoI) to acquire an 80% interest in fellow TSX-V-listed Sunrise Nevada’s Lovelock cobalt mine and Treasure Box project.
Lovelock is a past-producing mine, which shipped about 200 t, at an average of 14% cobalt and 12% nickel, during the 1880s, according to a statement Global Energy.
The company says that Lovelock and Treasure Box have not been thoroughly explored in the modern era, noting that the region where the mine and project is located shows strong enrichment in cobalt, nickel and copper.
Demand for cobalt, which is mainly sourced from the Democratic Republic of Congo, is set to bloom in the next decade, on the back of strong growth in lithium-ion batteries. Metals consultancy Roskill is forecasting that demand for cobalt in batteries will grow by 14.5% a year to 2027, by which point demand from this sector alone will be more than 240 000 t, or about twice the size of the total market in 2017.
In terms of the LoI, Nevada Sunrise has to first acquire the interest in the projects pursuant to an underlying agreement with a third-party vendor. Global Energy has to issue Nevada Sunrise shares equal to $200 000, assume $75 000 in cash payments to the underlying vendor, subject to an existing 2% net smelter royalty and reimburse Nevada Sunrise with 750 000 common shares. Global Energy also has to commit to spending $2.5-million in exploration expenditures over a three-year period.