Northern Cobalt Limited (ASX: N27) has announced that it has entered into a binding term sheet with Millrock Resources Inc. to acquire, via joint venture earn-in, up to 80% in the Goodpaster Project in Alaska.
The Goodpaster Project surrounds Northern Star’s Pogo Mine, which has produced 4 Moz @ 13.6g/t at 300koz pa; reserve/resource of over 6 Moz Au.
Northern Cobalt reported that it has secured an exclusive option for up to 100 days to complete due diligence and provision drill access road works in preparation for the 2020 drilling program.
The company said that the drilling is expected to begin in Q1, 2020 on high priority drill targets immediately adjacent to the recent NST announced Goodpaster Discovery “2.3km strike open in all directions” within 450m of the claim boundary.
N27 said that the initial exploration program will include 7,500m of diamond core drilling.
The company said that joint lead managers PAC Partners Securities and Taylor Collison have firm commitments for a placement of $1.5m.
80% interest in the Goodpaster Project
N27 reported that it has entered into a binding agreement with Millrock Resources Inc. (TSXV: MRO) to earn up to an 80% interest in the brownfields Goodpaster Project in Alaska.
Adjacent to Pogo mine
The Goodpaster Project is adjacent to Northern Star’s (NST) Pogo Mine which has a total endowment of 10 million ounces of gold and is currently producing at a rate of 300,000 ounces per annum.
Northern Star has rapidly advanced exploration drilling in the initial Goodpaster area with mineralized intersections now known to extend over a strike distance of 2.3km, to a depth of 500m and remains open in every direction.
It may be noted that Northern Star has announced a planned 30% production expansion by spending a further US$30m (A$43m) capital expenditure.
Terms of the binding agreement
Under the binding terms of the initial agreement, N27 has agreed to pay Millrock US$250,000 within 10 days to secure a 50 day exclusive option period.
A further payment of US$250,000 (at N27’s election) will extend the option period for a further 50 days, to 100 days in total.
These funds are to be used by Millrock for the Pogo West Project, in preparing drill access roads and other exploration activities and tenement rentals as agreed between MRO and N27 (Option Fee).
The entire Option Fee contributes to the exploration earn-in expenditure commitment for year 1, however, it is non-refundable if N27 elects not to enter into an earn-in agreement.
N27 may enter into the earn-in agreement within the 100 days of the exclusive option period. During the earn-in to the 60% level on the entire project, N27 has agreed to sole fund the activities.
N27 will be Manager throughout the sole funding period of the project, while Millrock’s Alaskan subsidiary Millrock Exploration Corp (MEC) will act as the Operator in year 1 with an 8% management fee and may be re-appointed at N27’s discretion.
N27 may elect to form a Joint Venture (JV) at the completion of any stage and co-funding conditions will commence.
At N27’s election, after completing a 60% earn-in on the entire project, a JV is formed over the entire project and N27 can elect to form a specific JV on one block of interest.
N27 may earn to 70% by sole funding a BFS study on this ONE block. The other 8 blocks will remain in the original JV according to final interest achieved during the earn-in period and subsequent co-funding JV.
On a positive BFS and N27’s decision to mine, N27 must pay MRO US$3m cash or shares. N27 may elect to loan carry MRO to first production and earn an 80% interest in the project on first production.
Drilling to start in 2020
Northern Cobalt reported that a new Millrock Resources geophysical survey has detected a high conductivity response directly along strike from a recent gold discovery on NST’s adjacent claims.
The conductor appears to be gently dipping and is therefore consistent with a low-angle regional shear zone that is known to host the adjacent Pogo Gold Mine.
Northern Cobalt reported that this will be its immediate focus, with drilling proposed to begin in Q1, 2020.
The company said that the initial exploration program for year 1, will aim to deploy 7,500m of diamond core drilling.
N27 said that the exploration program will utilise Lidar, field mapping, geochemical sampling and CSAMT geophysics surveys to unlock the structural controls and focus in on gold mineralisation on the West Pogo Prospect; as well as conduct regional work to identify further drill targets in this district scale system.
The company reported that it intends to seek shareholder approval to change its name at the 2019 AGM.
N27 said that Joint lead managers PAC Partners Securities and Taylor Collison have received firm commitments for a placement of $1.5m at a price of $0.035 per share in two tranches.
The funds will enable Northern Cobalt to progress due diligence on the Goodpaster Project and commence road works and logistics to support the Q1, 2020 drilling season.
One of the founding Directors of Northern Cobalt Ltd, Mr. Duncan Chessell has been appointed as Managing Director.
Mr. Chessell also brings a team of geoscientists Dr. Justin Gum, Ms. Christine Lawley, and Mr. Kelvin Blundell.
Len Dean, Chairman of N27 said: “Northern Cobalt is very pleased to have the support of two prominent Australian broking houses in PAC Partners Securities and Taylor Collison for this potential company maker opportunity.
We welcome the appointment of founding Director Duncan Chessell to the role of Managing Director and acknowledge his instrumental role in completing this transaction”.
Duncan Chessell, MD of Northern Cobalt said: “The potential Camp Scale of the gold system in evidence across the property from my recent field trip and the incredible results declared from neighbours Northern Star [ASX: NST] in recent announcements, puts this standout brownfields project head and shoulders above other opportunities assessed.
The all year mine-road access available to this project, is a huge logistical and cost saving advantage over typical summer only – helicopter supported projects in Alaska. Our project partners Millrock (Alaska) with their local experience, staff and geology team plus our Australian exploration team make a strong combination for improving the odds for discovery success”.