Fe Limited (ASX:FEL) has entered into a binding terms sheet for rights and obligations to the Kasombo Copper-Cobalt Project located in the Democratic Republic of Congo (DRC).
The rights and obligations are being acquired from Cape Lambert Resources (ASX:CFE) who established the rights through entering a 50:50 joint venture with a Congolese entity.
The Kasombo Project is located amongst some of the world’s largest and highest grade copper and cobalt mines.
Tony Sage, chairman, commented: “The acquisition of the Kasombo Project will provide FEL an ideal opportunity to build a portfolio of cobalt assets in the established cobalt producing region of DRC and nearby to the Kipushi Processing Plant.
“The car industry’s push toward electric vehicles underpins the burgeoning market for cobalt, a key metal for car batteries.”
The Kasombo Copper-Cobalt Project is located in an area with excellent infrastructure and the world’s major cobalt mining region.
The region accounts for ~50% of the world's cobalt reserves and ~60% of global cobalt supply.
The project consisted of three mineralised areas totalling 600 hectares within two granted mining licences.
Handheld XRF sampling of artisanal cobalt workings and exposed cobalt mineralisation at the Kasombo Copper-Cobalt Project areas confirm high cobalt and copper grades.
An exploration plan is ready to commence and the project has access to the nearby Kipushi Processing Plant.
Pursuant to Cape Lambert’s obligations under the joint venture agreement, the objectives of the Fe Limited will be to:
- Undertake the exploration activities at the Kasombo Project;
- Complete a feasibility study on the Kasombo Project within 18 months; and
- To commence mining activities at the Kasombo Project within 24 months.
The company will pay a cash and share component for consideration for acquiring the rights, totalling 35 million shares and $125,000.
Settlement of the transaction is conditional upon due diligence among other things, to be completed on or before 30 September 2017.
The transaction provides Fe Limited with exposure to the metal cobalt, which is currently trading at prices of US$60,000 per tonne.
Increasing cobalt prices are a result of increased demand due to the use of cobalt in electric vehicle batteries and constrained supply.
As a result of these market dynamics, major mining companies have been aggressively acquiring cobalt projects in the DRC.
Shares in the company are trading up 7.7% intra-day, currently priced at $0.028.