Explorer Cobalt Blue Holdings (ASX: COB) has entered into an agreement with Broken Hill Prospecting (ASX: BPL) to acquire 100% ownership and legal title of the Broken Hill (Thackaringa) cobalt project in western New South Wales.
The agreement will result in the dissolution of the Thackaringa joint venture in which Cobalt holds 70% equity and will provide Cobalt with full control and continuing management of Thackaringa and its tenements.
Broken Hill will receive a $500,000 cash payment from Cobalt as well as 9 million fully-paid Cobalt shares for $0.15 each.
The company will be entitled to a $1 million three‐year convertible note with interest of 6% per annum payable in arrears, convertible with a $0.20 conversion price, and with Cobalt having an option for early payout.
Also included is a $3 million promissory note – secured over the title to the tenements – with a three-year interest-free period and interest of 6% per annum in the fourth and fifth years, payable in arrears.
Broken Hill will retain the existing exploration base and precious metal rights defined in the joint venture, as well as a 2% net smelter royalty on all cobalt production from Thackaringa.
Largest cobalt deposit
Located over 63 square kilometres, Thackaringa is believed to be Australia’s largest cobalt sulphide deposit and ranks among the top 10 cobalt deposits on a global scale.
In April, Cobalt Blue announced a significant upgrade in the project’s global mineral resource, to 111 million tonnes at 889 parts per million cobalt equivalent, for 79,500t contained cobalt at a 400 parts per million cut-off.
It included a maiden measured resource of 18Mt at 1,150ppm cobalt equivalent for 17,100t of contained cobalt at a 400ppm cut-off.
The new resource will be converted to a reserve over the course of 2020.
In August, the company made moves to increase its footprint in the Broken Hill region when it applied for an exploration licence across an additional 32sq km, potentially bumping its total acreage to approximately 93sq km.
If granted, initial exploration activities will include refined targeting through historical data compilation, geological mapping, geochemical sampling and applied geophysics.
At midday, shares in Cobalt were steady at $0.140, while shares in Broken Hill remained at $0.027.