Grizzly Discoveries (TSX-V: GZD) (OTCPK: GZDIF) said Tuesday that it has inked a letter of intent with an unnamed private group to acquire the Robocop Property, a cobalt-copper-silver project in the Fort Steele Mining District in southeastern British Columbia, in an all-stock transaction. The Edmonton-based company mineral explorer will be adding Robocop to portfolio that includes more than 180,000 acres of precious/base metals and cobalt properties in the province, including the Greenwood property to the west, as well as its diamond-bearing kimberlites in Alberta and potash property along the Alberta-Saskatchewan border.
Covering about 9,900 acres across five mineral claims, the Robocop property is just north of the US border about 45 kilometers south of Fernie. Drilling by Teck Resources’ (TSX: TECK.B) (NYSE: TECK) Teck Explorations in the 1990’s and Ruby Red Resources in the 2000’s has returned grades up to 0.18% cobalt, 0.28% copper and 4.1 parts per million silver over 1 meter and 0.134% cobalt, 1.19% copper and 33.8 ppm silver over 1.23 meters.
Based upon historic data, Grizzly management thinks the project could host a significant cobalt-copper-silver deposit and warrants additional exploration to expand the known mineralization.
Cobalt has been a top metal in the past two years due to its importance in producing rechargeable batteries for electric vehicles. With EV production expected to continue to climb, analysts worry about a shortfall of cobalt and sourcing problems given that about 60% of the world’s supply comes from the war-torn and corrupt African nation of the Democratic Republic of Congo.
The U.S. has no commercial production of cobalt and inventories are nearly exhausted.
Per the LOI, Grizzly will buy a 100 percent interest in the property for the cost of two million “units,” which consist of one common share of GZD and one warrant to buy another common share of GZD at an exercise price of 14 cents for up to 36 months. Based upon when the deal was negotiated, the strike price almost certainly was at a premium, considering Grizzly’s all-time high of 14 cents was printed last month and was only hit on two occasions.
The sellers also will retain a 3 percent net smelter royalty, which Grizzly can buy down to 1 percent for $1.5 million within a time frame of two years subsequent to delivery of a feasibility study at Robocop.
The company did not specify if the LOI was binding or not, only saying that it is conducting due diligence to work towards a definitive agreement to finalize the purchase.
Shares of GZD closed trading in Toronto on Tuesday ahead 1.5 cents, or 15.8%, at 11 cents.
