Cobalt 27 has acquired a royalty of 1.5 per cent of gross revenues and AU$2 per tonne of ore mined under the Reed Industrial Minerals (RIM) sub-lease agreement held by Westgold on the producing Mount Marion Lithium Mine located in Western Australia.
Cobalt 27 is acquiring the Royalty from Westgold for total consideration of AU$250,000 plus 200 metric tonnes of physical cobalt metal to be delivered to a LME-bonded warehouse of Westgold’s choice. Cobalt 27 is committed to becoming a proxy for the large-scale transition to battery-based electric vehicles and energy storage systems, as well as being intensely focused on accelerating near-term cashflow from battery metals streams and royalties.
“The producing Mount Marion lithium mine has the world’s second largest high-grade lithium concentrate-spodumene reserves,” says Anthony Milewski, Chairman and Chief Executive Officer of Cobalt 27.
“Acquisition of the Royalty is being largely funded by 7 per cent of our existing holdings of physical cobalt. This transaction diversifies our portfolio of battery metals into lithium and exemplifies our core strategy of solidifying Cobalt 27 as the leading battery metals streaming and royalty company,” concluded Mr Milewski.
The Mount Marion lithium mine is jointly owned by one of China's largest lithium producers, Jiangxi Ganfeng Lithium (43.1 per cent), Mineral Resources (43.1per cent) and Neometals (13.8 per cent).
In 2015, Neometals, through its 70 per cent-owned subsidiary RIM, entered into an agreement to lease the lithium mineral rights over a portion of the Hampton Area Location 53 from Westgold. The lease applies to a 3-kilometre by 1-kilometre portion of the Hampton Freehold Location 53, containing extensions to the Mount Marion Lithium Projects Deposit 2 and 2 West, and the former WMC Deposit 3. The initial lease period is 10 years, with options for two 5-year extensions.
According to mining industry consulting firm CSA Global, the area is highly prospective, with the potential for additional, unmodeled ore in the Hampton Area Location 53. Lithium is a critical ingredient in all key electric vehicle (EV) battery chemistries; approximately 40 per cent of lithium demand is attributable to EV and energy storage systems. EVs are expected to account for the majority of lithium demand by 2025.
According to the 2016 Feasibility Study, Mount Marion has a life of mine lithium carbonate equivalent cash cost of US$5,345/tonne, which is below the Australian Spodumene peer average of approximately US$5,600/tonne. Management believes the Royalty has the potential to provide Cobalt 27 with considerable cash flows over a 17-year term.