Comstock Metals (CSL.V) has entered into an option agreement to acquire full ownership of five mining claims located (‘the Rawhide property) in the Gowganda area in Ontario. This Gowganda area is in close proximity to the so-called Cobalt Camp (which produced 25 million pounds of cobalt and in excess of half a billion ounces of silver in the previous century) which is currently heating up as the price of the battery metal is going through the roof.
In order to effectively earn a 100% stake in these claims (which total 662 hectares), Comstock will have to make cash payments totalling C$175,000 and issue 1 million shares within the first 24 months after receiving regulatory approval. Additionally, the company will have to spend C$100,000 on exploration within the first 12 months, followed by an additional C$400,000 in the subsequent 12 months. This means the total potential cash outflow related to this acquisition is just C$675,000, of which the majority will only have to be funded in 18 months.
It looks like Comstock Metals wants to diversify into the battery metals space as the two gold projects (in Saskatchewan and the Yukon Territories) don’t seem to get much credit from the market. And that’s a pity, as Comstock was making good progress at the Preview SW gold project in Saskatchewan.
Considering the company’s press release mentions the acquisition of the Rawhide property as ‘a first step’ in diversifying the metals portfolio, it looks like Comstock Metals will be adding more properties to its portfolio. This first step of the diversification process also allowed Comstock Metals to raise money, as it announced it arranged a C$500,000 placement earlier this week. The units will be priced at C$0.05 with every unit consisting of one share and one warrant, which each warrant having a strike price of C$0.10, valid for two years.