First Cobalt Corp (FCC.V) has entered into an agreement with Cobalt One Limited (ASX:CO1), an ASX-listed company which owns the Yukon refinery in Cobalt, Ontario. The exact location of the refinery couldn’t have been better as it’s within trucking distance (15 miles or 25 kilometers) from First Cobalt’s Keeley-Frontier project in Ontario, and it’s one of the four refineries fully permitted to process arsenic-containing ore. That’s important as the rock in the Cobalt camp contains arsenic, so having direct access to a refinery able and allowed to handle this rock is a very important step.
The earn-in terms are pretty straight forward. First Cobat will immediately pay C$750,000 in cash to Cobalt One to exercise an option to effectively go ahead with a 50/50 joint venture. Once First Cobalt decides to move ahead with the deal, it will have to pay an additional C$2.25M in cash and issue the value of 50 million shares of Cobalt one in cash or stock to Cobalt One (it’s unclear if First Cobalt has to pay the equivalent amount based on the share price when the deal was announced, or based on Cobalt One’s share price when the option will be exercised). At the current share price of A$0.11, this represents a total value of C$5.5M.
First Cobalt has now also completed a C$1.23M flow-through financing, issuing 2.05 million flow-through shares at a price of C$0.60. The flow-through funds obviously cannot be used for the refinery acquisition, and FCC will spend the entire C$1.23M on the ground at Keeley-Frontier.