TORONTO, Aug. 7, 2018 /CNW/ - Cobalt Blockchain Inc.
("COBC" or the "Company") (TSXV:COBC) and Traxys Europe S.A.
("Traxys") are pleased to announce that they have signed a letter
of intent ("LOI") on August 6, 2018
to establish a commercial partnership with respect to the
Traxys-owned cobalt hydroxide plant (the "Plant") in Lubumbashi,
Democratic Republic of the Congo
("DRC"). Highlights of the LOI include:
- A 10-year joint venture agreement with respect to leasing and
operating the Plant (the "JV/Lease Agreement");
- A US$30 million trade finance
facility to be made available by Traxys to COBC (the "Trade
Facility") with regard to certified, ethically-sourced cobalt
concentrates traded by COBC; and
- A 10-year off-take agreement covering 100% of the cobalt
concentrates produced by COBC at the Plant or purchased with the
proceeds of the Trade Facility (the "Off-Take Agreement").
JV/Lease Agreement for the Cobalt Hydroxide Plant
The Plant (Figure 1) consists of a process facility for
conventional hydrometallurgical cobalt leaching, constructed in
2014 in Lubumbashi, DRC, including an office complex with an assay
laboratory and staff housing for up to 20 people. Its product
cobalt hydroxide is used in the preparation of other cobalt
compounds, as a catalyst, and in the manufacture of battery
electrodes.
The Plant is situated on an approximately 8-hectare parcel of
land, located 5 kilometres from the Lubumbashi International
Airport and Highway N1. The Plant is connected to the Société
Nationale d'Électricité grid, and has a diesel backup
generator. The Plant has a design throughput of 50,000 tonnes
per annum (tpa) of run of mine feed. Expected output assuming
a minimum feed grade of 3% Co is 3,150 tonnes of cobalt hydroxide,
with 1,050 tpa of contained cobalt.
Under the JV/Lease Agreement, COBC will invest up to
US$2,000,000 to commission the Plant
towards its full production capacity, anticipated to take between 4
to 6 months. An independent technical engineering report will
provide detailed specifications, costing, and a timeline for
commissioning.
On commissioning, COBC will be responsible for Plant operations,
including operating and reasonable maintenance capital costs, under
a 10-year lease from Traxys. With respect to this, the Company will
issue to Traxys stock options of COBC equivalent to C$500,000 annually at an exercise price of
C$0.25 per share.
US$30 Million Trade Finance
Facility
Traxys will provide the Company with trade financing in the form
of a Credit Facility of up to USD $30,000,000 with an initial tranche of USD
$5,000,000 to USD $10,000,000. The first tranche will be
collateralised with pledges of COBC common shares and cobalt ore
and/ore concentrates.
All Trade Facility proceeds received by COBC shall be used
solely for payment of costs, charges, and general working capital
to procure ethically-sourced cobalt ores and concentrates.
Additional details will be made available once a definitive
agreement has been signed.
Off-Take Agreement
COBC will sign an exclusive off-take agreement with Traxys for
the supply of certified ethically-sourced cobalt hydroxide from the
Plant and any cobalt ore and/or cobalt concentrates purchased using
the proceeds of the Trade Facility. The term of the Off-Take
Agreement will continue until 10 years after the commissioning of
the Plant is completed and production commences.
The closing of the JV/Lease Agreement, Off-Take Agreement and
initial funding of the Trade Facility are subject to the completion
of technical, legal, financial, environmental and other due
diligence satisfactory to both Traxys and COBC, the execution of a
definitive agreement, and the necessary regulatory approvals.
"We're very excited about our commercial partnership with
Traxys," noted Lance Hooper, COBC
President and Chief Operating Officer. "This joint venture
puts Cobalt Blockchain that much closer to its near-term cash flow
goal and the possibility of cash flow-linked dividends to loyal
COBC shareholders."
Any cash flow-linked dividend, should one be distributed in the
future, will be derived from cash generation from the Company's
metal trading business, profitability and balance sheet
strength.
"Traxys is pleased to expand its existing footprint in the DRC
to include cobalt production that will be sourced, produced and
exported in an ethical, traceable and verifiable manner in
accordance with all existing Organization for Economic Cooperation
and Development (OECD) guidelines," said Steve Walsh, Traxys Director of Asset
Operations. "We are looking forward to partnering with COBC to
re-commission the plant and build a successful business for all
stakeholders."
About Traxys Europe S.A.
Traxys is a leader in financial and logistical solutions for the
ferroalloy, metal, mineral mining and energy
industries. Specifically, its focus is on the marketing and
sourcing of base metals and concentrates, minor and alloying
metals, industrial minerals and chemicals, and materials for steel
mills and foundries. Traxys manages all parts of the supply chain
from producer to consumer on a global scale. The company,
based in Luxembourg, has over
twenty offices worldwide and more than US$6
billion in annual turnover.
About Cobalt Blockchain Inc.
Cobalt Blockchain Inc. (TSXV:COBC) is a Canadian resource
company expanding its exploration and development business to
include cobalt assets in the Democratic
Republic of the Congo ("DRC"); it holds export trading
licenses for 3T, copper and cobalt from the DRC. COBC is the
first mining and mineral trade company set up specifically to
procure cobalt in compliance with the Organisation for Economic
Co-operation and Development ("OECD") due diligence framework. COBC
has developed and is implementing a blockchain-based reporting
platform to provide greater certainty of provenance and further
assurance that all minerals procured are ethically-sourced. Senior
management have over twelve years of experience working in the DRC
and a proven international track record in exploration success and
the trading of certified conflict-free, child-labour-free
minerals.
Forward-Looking Information
This release includes certain statements that may be deemed
"forward-looking statements". All statements in this release, other
than statements of historical facts, that address future
production, reserve potential, exploration drilling, exploitation
activities and events or developments that the Company expects are
forward-looking statements. Although the Company believes the
expectations expressed in such statements are based on reasonable
assumptions, such statements are not guarantees of future
performance and actual results or developments may differ
materially from those in the statements. There are certain factors
that could cause actual results to differ materially from those in
forward-looking statements. These include market prices,
exploitation and exploration successes, continued availability of
capital and financing, and general economic, market or business
conditions. Investors are cautioned that any such statements are
not guarantees of future performance and actual results or
developments may differ materially from those projected in the
forward-looking statements. For more information on the Company,
investors should review registered filings at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Cobalt Blockchain Inc.