A year after declining an option to purchase the Tamarak project in Minnesota, US, from Rio Tinto subsidiary Kennecott Exploration Company, Canadian firm Talon Metals has now entered into a new agreement to gain a controlling stake in the nickel/copper project.
The TSX-listed junior has entered into an option agreement with Kennecott to acquire up to a 60% interest in the project, which Talon president Sean Werger says is one of the world’s only remaining undeveloped high-grade nickel/copper/cobalt on infrastructure.
Talon already owns a 17.56% interest in Tamarack, which the company aims to develop as a Class 1 nickel producer, supplying the electric vehicle battery market.
“It is a tremendous stamp of approval to have Kennecott maintain a significant stake in Tamarack and for Resource Capital Fund VI (RCF4) to convert all of its debt into common shares of Talon,” said Werger.
Following the completion of the RCF debt conversion, Talon will be a debt-free company.
Pursuant to the terms of the option agreement, Talon will immediately take over ownership of the Tamarack project and will have the right to acquire a 51% interest upon a $6-million cash payment and the issuance of $1.5-million worth of common shares.
Within three years of the effective date of the option agreement, Talon either has to spend $10-million or complete a prefeasibility study and it has to pay an additional $5-million in cash.
In November last year, Talon elected not to exercise its option agreement to acquire 100% in Tamarack for $114-million.