Tyranna Resources Ltd (ASX:TYX) has entered into a binding option agreement to acquire 100% of the Goodsprings Cobalt and Base Metals Project in the US state of Nevada.
The company has purchased the option for $100,000 which gives it 14 days to complete due diligence and make a decision to purchase.
If Tyranna chooses to acquire the project, it will issue 141.1 million shares valued at 1.7 cents and 50 million options.
Shares in the company were up 30% intra-day to 2.6 cents after spiking at 3.1 cents earlier.
The acquisition would move Tyranna into the cobalt space
The acquisition is part of Tyranna’s diversification strategy aimed at capitalising on the battery minerals revolution.
Anticipated growth in electric vehicles (EVs) has supported a recent surge in the cobalt price to US$88,000 per tonne, a 280% increase over the past two years.
Notably, the project is located in stable mining friendly state of Nevada and 700 kilometres from Tesla Inc’s (NASDAQ:TSLA) Gigafactory.
Tyranna’s managing director Bruno Seneque said: “The company is well-funded and nimble enough to take advantage of good opportunities when they arise and the board of Tyranna identified US cobalt, its management and its assets as an excellent opportunity to bring further value to the company.”
Project has a history of mining
The Goodsprings Cobalt and Base Metals Project comprises 329 mining claims covering 26.6 square kilometres.
Cobalt oxide is found in the wall rock of nearly every copper deposit in the district and historical reports note that locally, cobalt is abundant.
In the early 1920s around 20 tons of cobalt-rich ore was shipped from four separate copper mines to processing facilities.
Significantly, these shipments assayed between 6% and 29% cobalt.
Results are pending from a stream sediment and rock chip sampling program recently completed.
Lack of modern exploration presents an opportunity
Due to the lack of any modern exploration, the project area presents attractive opportunities to deploy modern exploration techniques.
Tyranna is well funded with $8 million in cash and investments to progress high impact exploration program to commence immediately on settlement of acquisition.
Klaus Eckhof and Greg Smith to lead the project
Mining identity Klaus Eckhof will be appointed as a strategic advisor and Greg Smith as an exploration consultant.
Eckhof is the executive chairman of AVZ Minerals Ltd (ASX:AVZ) which is developing one of the world’s largest lithium pegmatite deposits and has a market cap of $530 million.
Eckhof also founded Moto Goldmines which acquired the Moto Gold Project, which was sold to Randgold Resources (LON:RRS) for about US$500 million.
Smith has over 40 years experience as an exploration and mining geologist and was previously exploration manager for Moto Goldmines.