- European Cobalt (EUC) has entered into an exclusive option agreement with 2617818 Ontario Inc. to divest two Swedish projects
- There is a non-refundable exclusive option fee of more than $32,000 for the right to acquire the two projects
- The total expenditure commitment is $2.5 million over the four year period while total cash consideration is $6.79 million
- European Cobalt’s share price is currently down 5 per cent with shares trading for 1.9 cents apiece
European Cobalt (EUC) has entered into an exclusive option agreement with 2617818 Ontario Inc. to divest two Swedish projects.
The proposed transaction reduced the holding costs associated with retaining non-core tenure in Sweden and has the potential of delivering further upside through future cash consideration and production royalties.
European Cobalt acquired the Ekedal and Ruda Projects in 2017 via direct licence application and has completed minimal work on them both.
The agreement consists of a €20,000 (AUD$32,400) non-refundable option feed to secure the exclusive right to acquire both of the projects.
Expenditure commitments consist of €30,000 (AUD$48,600) in the first year payable upon approval of the work program, €150,000 (AUD$243,000), €200,000 (AUD$324,000) and €400,000 (AUD$648,000) in the second, third and fourth years respectively.
Cash payments consist of €25,000 (AUD$40,500) option payment per project in the first year, and €30,000 (AUS$48,600) per project for the second year, and €50,000 (AUD$81,000) per project in the third year.
A €2,000,000 (AUD$3.24 million) acquisition payment is outlined for 100 per cent of the individual project in the fourth year.
A net smelter return royalty (NSR) of 1.5 per cent applies to both of the projects and at any point before the decision to mine, 0.5 per cent of the NSR can be purchased from one of the projects for €500,000 (AUD$810,000).
The remaining one per cent of the NSR can be purchased back before the decision to mine for €1,000,000 (AUD$1.62 million).
2617818 Ontario may choose to withdraw from one or both of the projects at any point during the four year period by providing 30 days written notice.
European Cobalt’s share price is down a steady 5 per cent today with shares trading for 1.9 cents apiece at 2:12 pm AEDT.