Cobalt 27 intends to enhance its exposure to cobalt through the acquisition of new or existing streams and royalties in producing mines, development projects and exploration properties. The Company has acquired 10 royalties including a net smelter return (“NSR”) royalty on the construction-ready Dumont Nickel-Cobalt project in Québec, a gross revenue royalty (“GSR”) on the construction-ready Nyngan Scandium-Cobalt in Australia, and 8 royalties on exploration-stage properties prospective for cobalt. These royalties on potential future cobalt (Co) and related mineral production are summarized in the following table:
|Royalty Name||Operator||Location||Stage||Primary Metal(s)||Royalty Type
|Dumont Ni-Co||RNC Minerals||Québec||Construction-ready||Ni-Co||1.75% NSR|
|Flemington Co-Sc-Ni||Australian Mines||Australia||Exploration||Co-Sc-Ni||1.5% GRR1|
|Nyngan Co-Sc-Ni||Scandium Int’l Mining||Australia||Construction-ready||Co-Sc-Ni||1.7% GRR1|
|Triangle||Palisade Resources Corp.||Ontario||Exploration||Co-Ag||2% Co NSR|
|Rusty Lake||Palisade Resources Corp.||Ontario||Exploration||Co-Ag||2% Co NSR|
|Professor & Waldman Properties1||Palisade Resources Corp.||Ontario||Exploration||Co-Ag||2% Co NSR|
|North Canol Properties1||Golden Ridge
|Yukon||Exploration||Ag-Pb-Zn-Co||2% Co NSR|
|Sunset||Private Individuals||British Columbia||Exploration||Cu-Zn-Co||2% Co NSR|
1 Gross Revenue Royalty
A royalty is a payment to a royalty holder by a property owner or an operator of a property and is typically based on a percentage of the minerals or other products produced or the profits or revenue generated from the property. Royalties are not working interests in a property. Therefore, the royalty holder is generally neither responsible for, nor has an obligation to, contribute additional funds for any purpose, including, but not limited to, operating or capital costs, or environmental or reclamation liabilities. Typically, royalty interests are established through a contract between the royalty holder and the property owner; and many jurisdictions permit the holder to also register or otherwise record evidence of a royalty interest in applicable mineral title or land registries. These unique characteristics of royalties provide royalty holders with special commercial benefits not available to the property owner because the royalty holder enjoys upside potential of the property with reduced risk.
A common form of royalty is a NSR - Net Smelter Return royalty, which is based on the proceeds paid by a smelter or refinery to the miner for the mining production from the property less certain transportation, smelting and refining costs as defined in the royalty agreement. This type of royalty provides cash flow that is free of any operating or capital costs and environmental liabilities.
Streaming interests are agreements that provide, in exchange for an upfront payment, the right to purchase all or a portion of the metals produced, at a defined price for the term of the agreement, which is typically the life of mine for the respective property.
Streams and royalties have several structural advantages relative to other commodity acquisition alternatives as they provide many of the benefits of mine ownership without the exposure to increasing capital, operating and environmental costs. Investing in a streaming or royalty company is similar to investing in a physical commodity although it also provides the additional benefit of gaining exposure to earnings and dividends, resource growth and production growth while minimizing exposure to capital, operating, environmental and closure costs.
Cobalt 27’s management has significant streaming and royalty experience and is actively pursuing streams and additional royalties. The focus will be on streaming opportunities that could provide the Company with near-term cash flow and royalties on exploration-stage cobalt properties that will provide longer-term optionality on the price of cobalt.