Kuya has started drilling as per their recent announcement Terms of the agreement per the announcemnt Dec 21,2020
TORONTO , Dec. 21, 2020 /CNW/ - First Cobalt Corp. (TSXV: FCC) (OTCQX: FTSSF) (the "Company") is pleased to announce that it has entered into a letter of intent with Kuya Silver Corporation ("Kuya") to sell a portion of its silver and cobalt mineral exploration assets in the Canadian Cobalt Camp and form a joint venture to advance the remaining mineral assets. The transaction will allow the two companies to resume mineral exploration activities in a historic silver district while providing First Cobalt capital for the recommissioning of its Canadian refinery.
Key terms of the transaction are as follows:
- Kuya will pay $4 million on closing for a 100% interest in the Kerr area properties (the "Kerr Assets", see Figure 1), comprised of $1 million in cash and $3 million in Kuya common shares
- Kuya will pay an additional $1 million in cash or shares within 6 months of the acquisition of the Kerr Assets should it elect to exercise an option to earn up to a 70% interest in First Cobalt's remaining Cobalt Camp assets (the "Remaining Assets")
- 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
- Kuya will make a milestone payment of $2.5 million in cash or shares 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.
The parties intend to complete the transaction in Q1 2021, at which point Kuya will own the Kerr Assets outright. The companies will form a 70-30 joint venture on the Remaining Assets if and when all of the conditions outlined above are satisfied. The partnership with Kuya demonstrates the Company's commitment to creating value for its shareholders as it continues to focus on cobalt.