European Electric to acquire Skroska mine in Albania
EUROPEAN ELECTRIC Metals Inc. has entered into an agreement to acquire 100 per cent of the issued and outstanding shares of Gerold Sh.pk., an arm’s-length party, which holds the Skroska iron-nickel mine in Albania.
Gerold previously ran a 200-ton-per-day mine at Skroska, a fully permitted mining operation covered by a 20-year mining licence, which was issued in 2008. Gerold conducted mining operations on Skroska from 2008 to 2013 using an open stope method. The operation previously focused on nickel production and the mine was put on care and maintenance in 2013 due to low nickel prices. European Electric’s geological team believed there was potential for high-grade cobalt in this geological setting and during sampling realized this potential.
All underground infrastructure and mining equipment necessary to conduct mining operations are in place, owned and on site. The mine is 16 kilometres on a paved road to a rail loading station that connects the mine to a shipping port.
In addition to the commencement of mining operations, the company will also target to confirm and expand the historic resource through drilling and undertake a study to evaluate an expansion of the historic mining rate. During sampling at the Skroska the company’s geological team took 18 laterite samples collected from 10 different underground locations. The assays ranged from 0.05 per cent to 0.54 per cent cobalt and from 0.36 per cent to 1.92 per cent Ni. Ten of these samples assayed 0.15 per cent Co and above. The presence of this cobalt-rich laterite had not been previously recognized at Skroska.
The sam ples were t aken vertically from the pillars/columns of the mine and have widths varying from 0.40 metre to 1.10 metres. The
sampling program covered a lateral distance of approximately 420 metres.
Fred Tejada, company chief executive officer and director, states: “We are excited our geological team recognized the potential for the cobalt-rich horizons at Skroska and very pleased that this potential has been confirmed in the sampling program, via high-grade cobalt results. This transaction represents a major step towards our goal of becoming an ethical source of high-grade cobalt production, within a European setting.”
The company has four months to conduct due diligence study which will include among others a study to determine if mining operations can be restarted within six to 12 months.
Terms of the agreement
Under the terms of the agreement, the company will acquire 100 per cent of the issued and outstanding shares (quotas) of Gerold for total consideration of 5.41 million euros over three years, comprising payments totalling 5.2 million euros and share issuances valued at 210,000 euros.
The company will purchase 100 per cent of the quotas of Gerold for 3.03 million euros and will purchase a loan of 2.38 million euros due from Gerold by paying 2.17 million euros and by issuing 210,000 euros in shares of the company. The company will acquire equity interests in Gerold proportionate to the amount paid and can elect to accelerate the payments to accelerate the equity interest accumulation.
The company is required to make payments and issue shares as follows:
• Pay 200,000 euros in four months from closing;
• Pay 480,000 euros to the vendors and purchase 486,948 euros of the loan on the 12th month from closing;
• Pay 1,085,000 euros to the vendors and purchase 931,526 euros of the loan on the 24th month from closing;
• Pay 1,265,000 euros to the vendors and purchase the balance of the loan by paying 751,526 euros and by issuing 210,000 euros in shares on the 36th month from closing.
Notwithstanding the above, the company may defer the equity and loan payments due on the 24th month to the 36th month and make the payments for both the 24th month and the 36th months together. Gerold will retain a 1.5-per-cent net smelter royalty which the company can buy at any time for 1.50 million euros. The company has four months to conduct due diligence from date of signing of the agreement.
We seek Safe Harbor.
Erika Flores condensed this news release (email@example.com).
John Geoffrey Booth, Mark Crawford, George Arthur Gorzynski, Frederick James Sveinson, Fred Antonio C Tejada
(EVX) Shares: 41,803,126