Euro­pean Elec­tric to ac­quire Skroska mine in Al­ba­nia

Stockwatch Daily - - MINES & METALS - Mr. Fred Te­jada re­ports

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 (erikaf@stock­watch.com).

John Ge­of­frey Booth, Mark Craw­ford, Ge­orge Arthur Gorzyn­ski, Fred­er­ick James Svein­son, Fred An­to­nio C Te­jada

(EVX) Shares: 41,803,126

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