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First Cobalt and Kuya Silver Complete Cobalt Camp Transaction

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First Cobalt Corp. (TSX-V: FCC) (OTCQX: FTSSF) is pleased to announce that it has completed its transaction with Kuya Silver Corporation to sell a portion of its exploration assets in the Canadian Cobalt Camp and form a joint venture to advance the remaining mineral assets. Kuya has acquired a 100% interest in the properties located in the historic Kerr silver district along with an option to earn a 70% interest in the remainder of First Cobalt’s Ontario land package.


Key terms of the transaction are as follows:


  • Kuya acquired a 100% interest in the Kerr area properties for $4 million
  • Kuya may elect to exercise an option to earn up to a 70% interest in First Cobalt’s remaining Cobalt Camp assets (the “Remaining Assets”) over the next six months, upon payment of an additional $1 million with further payments required to reach the 70% interest level
  • Kuya will make a milestone payment of $2.5 million upon completion of a maiden mineral resource estimate of at least 10 million silver equivalent ounces on either of the Kerr Assets or the Remaining Assets. The payment increases to $5 million should the resource exceed 25 million silver equivalent ounces.
  • First Cobalt will spend $1 million of the flow through proceeds it raised in August 2020 on eligible expenditures, split equally between the Kerr Assets and the Remaining Assets


First Cobalt shall have a right of first offer 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 & Chief Executive Officer, commented:

“The transaction with Kuya allows us to advance our strategy of producing the world’s most sustainable cobalt. Our priorities are to recommission our Canadian refinery to produce cobalt sulfate by late 2022 and to resume drilling at our flagship cobalt-copper project in Idaho.

This transaction creates value for shareholders with a prospective asset that we do not have the bandwidth to progress due to our focus on our more advanced assets. We are proud to be partnering with Kuya, as a shareholder and as a joint venture partner, to build upon First Cobalt’s previous exploration work in a historic world class silver and cobalt mining camp.”


The $4 million payment received today was comprised of $1 million in cash and 1,437,470 Kuya common shares. $500,000 of the cash consideration will be held in escrow pending completion of certain post-closing obligations. Future contingent payments described above may be paid in cash or shares, at Kuya’s election.


The option to acquire an interest in the Remaining Assets can be exercised by Kuya by satisfying the following earn-in conditions: 50% interest by incurring $2 million in expenditures and making a payment to First Cobalt of $300,000 in year 1; 60% interest by incurring $1 million in expenditures and a payment of $350,000 in year 2; and 70% interest by incurring $1 million in expenditures and a payment of $350,000 in year 3. Going forward, the Kerr Assets and the Remaining Assets will be referred to as the Silver Kings Project, in honour of the Cobalt, Ontario professional hockey team founded in 1906.


Cormark Securities Inc. acted as advisor to First Cobalt in connection with this transaction.


The Cobalt Camp


First Cobalt holds the largest land package in the historic silver-cobalt mining camp of Cobalt, Ontario, with more than 10,000 hectares and over 50 past-producing mines, including some of the region’s largest high-grade silver producers. The Company invested $10 million in an extensive exploration program that included creating a proprietary 3D geological model based on digital compilation of historic mine workings, integrated with exploration drilling, geophysical data and surface bedrock geology maps.


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. Discovered in 1903, silver production peaked between 1919 to 1931. Exceptionally high-grade vein-style, native silver mineralization was mined at up to 185 oz/t Ag (5,200 g/t Ag) from surface and underground.


The Kerr Assets include eight historic silver mines on a contiguous 900-hectare area: Crown Reserve, Kerr Lake, Lawson, Drummond, Conisil, Hargrave, Silver Leaf and Bailey. These mines produced over 50 million ounces of silver and 900,000 pounds of cobalt, mainly between 1905 to 1950. The deepest shaft was less than 200 metres. Also included in the Kerr Assets is the nearby Silverfields property, which was mined by Teck until 1989 to a depth of 300 metres, producing over 17 million ounces of silver, demonstrating the depth potential to some mineralized systems.


About Kuya Silver Corporation


Kuya is a Canadian–based silver–focused mining company that owns the Bethania Project, which includes the Bethania mine, located in Central Peru. The Bethania mine was in production until 2016, toll–milling its ore at various other concentrate plants in the region, the Kuya’s plan is to implement an expansion and construct a concentrate plant at site before restarting operations. The Bethania mine produced silver–lead and zinc concentrates from the run of mine material, until being placed on care and maintenance due to market conditions and lack of working capital.


About First Cobalt


First Cobalt owns North America’s only permitted cobalt refinery. Cobalt refining is a critical component to the development and manufacturing of batteries for electric vehicles and forms a foundational piece of the next generation of the North American auto sector and other electrified consumer and industrial applications. First Cobalt owns the Iron Creek cobalt-copper project in Idaho, USA and controls significant silver and cobalt assets in the Canadian Cobalt Camp, including more than 50 past producing mines.


Qualified Person Statement


Dr. Frank Santaguida, P.Geo., is the Qualified Person as defined by National Instrument 43-101 who has reviewed and approved the contents of this news release. Dr. Santaguida is employed as Vice President, Exploration for First Cobalt

Posted March 1, 2021

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