Hammer Metals has signed a letter of intent with Canadian mining company Global Energy Metals Corporation setting the terms to sell its Mount Dorothy cobalt project and the Cobalt Ridge projects in North West Queensland.
The projects are located half way between Mount Isa and Cloncurry south of the Barkly Hwy and are increasingly important due to the need for cobalt in the growing electric vehicles market.
The Hammer deal involves a cash payment of $80,000 on execution of the agreement, $300,000 in GEMC shares and exploration expenditure of $1m in two years with a net smelter royalty payment of 1.5percent.
Hammer and GEMC already have a joint venture relationship for the nearby Millennium cobalt-copper deposit situated 30km north-west of Cloncurry.
In January they announced they would accelerate drilling at Millennium after finding several high-grade cobalt intercepts from a three-hole program in December.
Hammer manager director Alex Hewlett said the new deal strengthened their relationship and would combine efforts to build a new cobalt camp in the Mount Isa region.
“This strategic alliance offers shareholders of both companies extensive possibilities for growth and aligns well with Hammer’s strategy by leveraging our infrastructure and proven operational expertise that will be key in furthering the exploration and development potential in this important cobalt-rich region,” Mr Hewlett said.
GEMC’s president and CEO Mitchell Smith said the acquisitions fitted in with the cobalt-focussed supply mandate.
“The need to source non-conflict future supply of cobalt as feed to the growing demand being fuelled by the surge in production of electric vehicles and battery-based consumer electronics has been very apparent,” Mr Smith said.
“This building of a cobalt camp in Australia is a step closer to supply diversification that will further unlock and enhance value for our shareholders and strategic downstream partners.”