The Projects are located in a readily accessible region within Chile’s past-producing San Juan cobalt district, which is noted for the occurrence of high grade cobalt mineralization.
In November 2017, Chile’s Corporation for the Promotion of Production (“CORFO”) and the Chilean National Service of Geology and Mining (SERNAGEOMIN) published a report that reviewed the cobalt mineral resources in Chile. Meaningful primary cobalt production has historically been developed in two districts in Chile, one of which is the San Juan cobalt district in the Atacama Region.
The Company reviewed available regional and district-scale datasets in the San Juan cobalt district and selected the Projects based on geological characteristics, abundance of historic workings, evidence of mineralization, and proximity to past production. The Company’s initial exploration focus on the Projects will center on compilation of historical data, regional mapping and prospecting, and sampling to identify priority areas for follow up work.
Evidence of historic workings exist on the Projects, which occur on the same trend and in close proximity to the past producing Cobaltera mine. Access is via secondary roads approximately 25km south of the port of Huasco, Chile. Infrastructure is good and the district is approximately 10km from tidewater.
– La Sufrida (6 Hectares)
– Pirula ½ and Pirula ½ II (8 Hectares)
– Consuelo 1-5 and Amelia ½ (25 Hectares)
– La Codiciada (4 Hectares)
– Victoria and Mina Blanca (54 Hectares)
The San Juan cobalt district includes several historical producing mines, which produced cobalt (and copper) for several decades at the turn of the 20 th century. The past-producing Cobaltera Mine was the last to close in the mid-1940’s at the end of the Second World War. At the peak of production there were three processing plants in the area and several small-scale operations.
Cobalt production and smelting in the district started in 1885 but no statistics are available prior to 1903. From 1903 to 1944 the district produced approximately 300,000 tonnes of cobalt ore grading up to 4% cobalt (plus copper) (“El Cobalto en Chile, Caja Credito Minero”, H. Hornkohl,1944).
The known San Juan cobalt district measures approximately 4km by 10km. Numerous small- scale mines, historical shafts and adits exist in the region, indicating the existence of an extensive network of mineralized structures and past high-grade mining activity. Numerous ruins and slags from the past producing cobalt-copper smelters also exist in the district.
Mineralization in the district occurs in high-grade veins and mantos, with average cobalt grades reportedly up to 1.6% cobalt for primary mineralization, and up to 6.4% cobalt in the enriched secondary oxidized zones. Vein thickness varies greatly from 0.5m to 20m. Shafts over 100m in depth exist on some of the vein structures. The cobalt mineralization is associated with copper mineralization and is noted to be structurally controlled and closely associated with the large regional northeast trending Atacama fault system. In the oxidized zone (up to 40m thick) cobalt occurs as erythrite, a cobalt rsenate. In the deeper primary zone the mineral cobaltite, a cobalt sulfo-arsenide mineral, is the main cobalt mineral.
Road cut shows Cu and Co oxide mineralization and minor hematite in two parallel 10 m wide NW trending shear zone in meta-sediments. Both mineralized shear and fracture zones would be ore shoots and are separated by about 5 m of barren less permeable meta-sediments. No other mine or reconnaissance workings were identified. Property seem to be small but of interest considering that such mineralized shear zones may extend to the NW and to the SE properties. Resource potential if these shoots extend 500 along strike (possibly into adjoining properties) and to 500m of depth: 5 M ton of mostly Cu Co sulfide mineralization. Sampling of these veins on the road cut could give an idea of Cu and Co grades.
Although these properties are located in the central part of the Cobaltera Trend the open pit mines like the one in Consuelo (300 m along a NE trend and up to 50m wide) and minor pits in Pirula 1 & 2 correspond to copper oxide operations along an important reverse fault system presenting tectonic and minor hydrothermal breccias and a weak stockwork of qtz -hematite- chalcopyrite veinlets. Due to supergene leaching and enrichment of Cu ox along in fractures in the upper 10 to 20 m produced enough grades (0.5 to 1.0 % Cu ) for open pit mining. No Cobalt oxides like erythrine were observed in these pits. No mining activities in these pits following shut down of the Dos Amigos (Domeyko) leaching plant. However higher grade Cu – Co oxides and / or Au in splay off veins of this mineralized fault system. This suggest that these properties and their adjoining concessions offer exploration potential and should be pursued.
Consuelo pits on a NE trending reverse fault system (blue line), Consuelo pit 300m long by 50 m wide and < 20m deep.
Under the terms of the Agreements, the Company can earn a 100% interest in the Projects through the following cash and share payments:
|On signing:||$300,000||250,000 shares|
|6 months:||$300,000||250,000 shares|
|12 months:||$400,000||300,000 shares|
|18 months:||$400,000||300,000 shares|
|On signing:||$100,000||150,000 shares|
|6 months:||$100,000||150,000 shares|
|On signing:||$200,000||200,000 shares|
|6 months:||$200,000||200,000 shares|
|12 months:||$300,000||300,000 shares|
|18 months:||$300,000||300,000 shares|
|On signing:||$300,000||300,000 shares|
|6 months:||$400,000||400,000 shares|
|12 months:||$400,000||400,000 shares|
|24 months:||$500,000||500,000 shares|
|36 months:||$500,000||500,000 shares|
|48 months:||$500,000||500,000 shares|
Upon completion of the option payments, the Company will be deemed to have exercised the options and will have earned an undivided 100% legal and beneficial interest in and to the Projects. The Projects are not subject to underlying royalties. During the option period, the Company will be responsible for maintaining the concessions comprising the Projects in good standing. There are no work commitments and all work carried out on the Projects will be at the sole discretion of the Company. Initially, the Company will focus on data review, and mapping and sampling to identify priority targets for follow-up.
The Agreements are subject to the approval of the TSX Venture Exchange.
The Company entered into the Agreement with Artemis Mining SpA (“Artemis”), a private Chilean company that had previously entered into an option agreement (the “Underlying Option Agreement”) with the current owner of the Project, Patrick Burns. Pursuant to the terms of the Agreement, the Company agreed to assume the Underlying Option Agreement and to reimburse Artemis for expenses and property payments previously incurred totaling US$150,000. The Company has now established a Chilean subsidiary which has assumed the Underlying Option Agreement in accordance with Chilean law.
To earn a 100% interest in the Project pursuant to the terms of the Underlying Option Agreement, the Company will be required to make the following payments:
The vendor under the Underlying Option Agreement retains a 3% NSR royalty, of which two-thirds can be bought back (leaving a 1% NSR royalty) by paying US$2,000,000 for each percentage point of the NSR royalty bought back.
The Cobalt price per pound has grown over the past 10 years at a Compound Annual Growth Rate of over 4%
Major global Cobalt applications = 49% Batteries + 18% Super Alloys
Cobalt is mainly produced as a by-product of Nickel and Copper mines, with a very small percentage coming from Cobalt-specific mines
World Cobalt demand has increased by ~160% since 2016, with recent EV industry popularity providing the propulsion forward.
According to BMO Capital Markets, Cobalt demand will potentially rise by 60% by 2025 (2017 Report)
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