VANCOUVER, BC, Aug. 19, 2024 /PRNewswire/ - Capella Minerals Ltd (TSXV: CMIL) (OTCQB: CMILF) (FRA: N7D2) ("Capella" or the "Company") is pleased to announce that it has executed a Definitive Acquisition Agreement (the "Agreement") with Teako Minerals Corp. (CSE: TMIN) ("Teako") pursuant to which Teako will acquire a 90% interest in Capella's high-grade Lkken copper-cobalt-zinc ("Cu-Co-Zn") project in Trndelag, central Norway. In accordance with the Agreement, Capella will receive a combination of cash and common shares in Teako within two weeks of signing, a firm commitment by Teako to carrying out drilling on the mot target and bringing additional Cu-Co-Zn targets to drill-ready status, with Capella retaining a non-dilutable 10% carried interest on the Lkken project through to commercial production.
Capella's Lkken project covers 114 sq. km and contains the past-producing Lkken copper-zinc mining operation, the largest Cyprus-type massive sulfide ("VMS") deposit known globally with reported past production of 24MT @ 2.3% Cu + 1.9% Zn1). In addition, the Lkken project contains the drill-ready mot VMS target and multiple satellite target areas with the potential for further Lkken-type VMS discoveries (see Company News Release dated July 22, 2024).
Terms of the Agreement
Key terms of the Agreement under which Teako will acquire a 90% interest in the Lkken project include:
i) Capella to receive $C 350,000 in cash and 2,500,000 common Teako shares on or before August 30, 2024.
ii) Teako to commit to drilling the mot target with new funds raised within twelve months of signing the Agreement, in addition to advancing at least two further targets to drill-ready status within 24 months from signing.
iii) Teako to pay Capella a further $C 1,250,000 upon a Final Investment Decision ("FID") being made to proceed to the construction of a mine within the Lkken project.
iv) Capella to retain a 10% carried interest to production, which includes capital costs, on any discovery made within the Lkken project.
v) Teako to keep the property in good standing and to make all annual advanced royalty payments to EMX Royalty Corporation ("EMX") starting 30 September, 2024.
vi) Customary tag along / drag along rights, with Capella maintaining at all times a Right of First Refusal ("ROFR") on any bona fide third-party offer received for Teako's interest in the Lkken project.
In the event that Teako makes a Final Investment Decision to proceed with commercial production, Capella and Teako will then enter into a Joint Venture Agreement ("JV Agreement"). As part of this JV Agreement, Capella will not be required to make any contributions to the mine capital costs until commercial production commences (at which time Capella will be required to payback its share of capital costs by netting out 25% of the amount of any distribution to Capella until such amounts are recovered). Should the mine close prior to final repayment, the balance outstanding payable by Capella will be forgiven clear of any further obligations.
Eric Roth, Capella's President and CEO, commented: "Today, we are very pleased to be announcing this Agreement with Teako, which will allow the Lkken project to advance through further exploration and drilling – including at the drill-ready mot target – in addition to creating a significant district-scale exploration and development project through the combination of Lkken with Teako's adjacent Lomunda and Venna projects. Capella shareholders also retain a direct interest in any discovery at Lkken all the way through to production, and also benefit from exploration success by Teako – both within the Lkken district and elsewhere throughout Norway – through our Teako shareholding which will now total 3,500,000 common Teako shares.
Capella looks forward to working together with Teako's technical / management team, with whom a solid relationship has already been built through joint efforts at the Vaddas-Birtavarre project in northern Norway, in order to ensure success for all parties at Lkken. I do look forward to keeping the market updated as our exploration programs advance".