Acquisition from Glencore
The following is the Acquisition agreement between Glencore Canada Corporation and Fuse Cobalt Inc. (formerly LiCo Energy Metals Inc.):
March 5th, 2018 – Vancouver, British Columbia; – LiCo Energy Metals Inc. (“the Company” or “LiCo”) TSX-V: LIC, OTCQB: WCTXF is pleased to announce that it has formally completed its obligations to Glencore Canada Corporation under the Mineral Property Acquisition Agreement (“Property Agreement”) dated August 31st 2017 and announced on September 5, 2017 by the Company. The Mineral Rights were owned originally by Glencore Canada Corporation (subsidiary of Glencore plc) (“Glencore”) of Baar Switzerland (LSE: GLEN). The Property Agreement allows LiCo to acquire a 100% interest in mining rights for patent #585 (the “Glencore Bucke property”) situated in Bucke Township, 6 km east‐northeast of Cobalt, Ontario. The Purchase Agreement includes a back‐in provision, production royalty and an off‐take agreement in favor of Glencore.
Glencore is one of the world’s largest producers of cobalt as a result of by‐products created from its copper assets in the DRC and nickel assets in Australia, Canada and Norway.
“We are very excited to formally acquire this strategically located cobalt property from Glencore. Its purchase agreement allows LiCo to expand upon one of Glencore’s longstanding Canadian cobalt assets. If all goes as planned, we could be selling all our cobalt produced back to Glencore in the future. As I have mentioned before, not only is this a great cobalt asset, but we have also found a significant future customer in Glencore.” states Tim Fernback, LiCo’s President & CEO.
Strategically, the Glencore Bucke property consists of 16.2 hectares and sits along the west boundary of LiCo’s Teledyne Cobalt Project that covers the southern extension of the former producing 15 Vein on the past‐producing Agaunico Mine Property. Historically, the Agaunico Mine produced 4,350,000 lbs. of cobalt and 980,000 oz. of silver during the mining boom of the early 1900’s (Cunningham‐Dunlop, 1979).
In the early 80’s the Glencore Bucke property was explored by 36 surface diamond drill holes totaling 3,323 m. The drilling program outlined two separate vein systems hosting significant cobalt and silver values. The two zones are known as the Main Zone, measuring 152.4 m in length, and the Northwest Zone, measuring 70.0 m in length. The Main Zone had a north‐south strike, which is hypothesized as the southern extension of the #3 vein from the Cobalt Contact Mine located immediately to the north of lease #585 (Bresee, 1982). Additional work was recommended but never completed due to a downturn in cobalt prices at the time. LiCo has recently completed the Glencore Bucke Property Phase 1 diamond drilling program. During the fall of 2017, LiCo completed 21 diamond drill holes totaling 1,900 m. A summary of the results of the Glencore Bucke Property Phase 1 diamond drilling program can be found in LiCo’s news release dated January 26, 2018.
On LiCo’s adjacent Teledyne property, historical drilling also encountered two zones of cobalt/silver mineralization extending from the boundary of mined zones at the Agaunico Mine in a north‐south direction. In 1980, Teledyne completed a 700 m long production decline to reach the mineralization encountered in their surface drill program. Both the surface and underground drilling programs confirmed the extension of the Agaunico cobalt zones onto the Teledyne property for a strike length of 152.4 m. In addition, the drill program encountered a second zone with a strike length of 137.2 m. The most significant results included 0.644% Co over 16.9 m, 0.74% Co over 8.7m, and 2.59% Co over 2.4 m (Bresee, 1981). LiCo has recently completed a Phase 1 diamond drilling program on the Teledyne Property in the fall of 2017, whereby LiCo completed 11 diamond drill holes totaling 2,200 m.
Terms of the Acquisition
Purchase Price – The Purchaser shall pay to the Vendor the sum of $150,000 on the Approval Date; and pay to the Vendor the sum of $350,000 within 6 months after the date of the Agreement (the “Closing Date”). In addition, prior to the Closing Date during the Acquisition Period, the Purchaser shall incur $250,000 in Exploration Expenditures on the Property.
Offtake Agreement – Prior to the commencement of Commercial Production, the Purchaser shall enter into an off‐take agreement with the Vendor for all ores and/or concentrates produced from the Property and/or the Teledyne Property. The off‐take agreement shall be on such terms and conditions as are commercially reasonable and at prevailing market prices;
Production Royalty – The Royalty will consist of a 3.5% of Net Smelter Return calculated on a quarterly basis on all Products extracted from, processed and sold that originate from mining operations on the Property from and after Commercial Production. One‐half (1/2) of the Royalty can be purchased for $1,000,000 payable to the Vendor or its assignee;
Back‐In Option – from and after the Closing Date, subject to Glencore or an affiliate, determining that a discovery of one or more ore bodies having a minimum aggregate in‐situ value of $100M or more from which minerals can be feasibly extracted, the Purchaser grants to the Vendor or its nominated affiliate an irrevocable, sole and exclusive right and option to acquire from the Purchaser a 51% interest in the Property and all Property Rights, free and clear of all burdens of any nature or kind. Once the Back‐in Option is exercised a joint venture will be formed and a management committee established with representatives of both companies.
Glencore plc is a leading integrated commodity producer and trader, operating worldwide with diversified operations comprising around 150 mining and metallurgical, oil production and agricultural assets. Glencore’s industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries where they employ around 155,000 people, including contractors. Glencore trades in and distribute physical commodities sourced from third party producers as well as their own production. The company also provide financing, processing, storage, logistics and other services to commodity producers and consumers.
The Fuse Distinction
The ability to raise capital in all market conditions which will ensure corporate objectives are consistently met and shareholder returns are maximized regardless of fluctuations in the global macro economic environment that may impact commodity pricing.