Peter Kennedy | April 25, 2018 | SmallCapPower: One of Canada's oldest mining camps is witnessing a rebirth as mining companies jockey for position near the town of Cobalt, Ontario.
While the exploration rush is still in its early phases, one of the companies that hopes to be successful is Power Americas Minerals Corp. (TSXV:PAM).
The Vancouver-based company aims to capitalize on the electric vehicle revolution, which is expected to boost demand for cobalt, a key ingredient in the production of cathodes used to manufacture lithium-ion batteries.
"To get energy density in lithium-ion batteries you need to use cobalt,'' said Neil Pettigrew, Power Americas' Vice President Exploration & Director. "It's as simple as that.''
Headed by CEO Jeffrey Cocks, Power Americas Minerals wants to be a primary cobalt supplier in a world where the vast majority of cobalt is mined as a by-product of other metals, including copper and nickel.
Going forward, the Company expects to benefit from forecasts that the price of cobalt will continue to rise after a 120% increase in 2017. For example, in a December 2017 report, BMO Capital Markets said a doubling of the cobalt spot price over the coming years is not out of the question.
In keeping with that plan, Power Americas Minerals emerged as one of the largest landholders in the Cobalt camp with about 3,300 hectares under its control.Figure 1: Cobalt Camp Area Play
The Company's flagship asset is the Kittson Cobalt Property, which hosts the former Shakt-Davies and Kittson mines.
The Shakt-Davies and Kittson mines saw limited production but differed from the other mines in the Cobalt camp in that they featured low silver grades but were enriched in cobalt and gold. The Kittson mine operated from 1927 to 1930 and produced roughly 600 pounds of smaltite (a cobalt-bearing mineral) and reported gold assays of up to 6.9 grams per tonne.
The Shakt-Davies mine saw intermittent development from 1906 to 1964, with the bulk of the underground workings completed between 1924 and 1926. There are no remaining production records. However, historic records indicate values of 1.5% cobalt over 1.37 metres, with select grab samples returning up to 4% cobalt and 93.3 grams per tonne gold.
Recent sampling by Power Americas Minerals has returned up to 3.6% cobalt in prospecting and 0.46% cobalt over 1.5 metres in shallow drilling.
"Cobalt is contained in steeply-dipping fracture zones that contain quartz carbonate veins," Mr. Pettigrew said.
Power Americas Minerals and other companies in the region are rushing to be the first to establish a cobalt resource estimate on their properties that will comply with National Instrument 43-101 standards of disclosure. Power Americas wants to be the first, but there's much work to be done.
"We need to complete another 10,000 metres of drilling at a minimum," Pettigrew said.
Power Americas Minerals hopes to take a key step along that road when it releases initial results from a 2,000-metre drill program, comprised of 18 holes, likely in the next few weeks.
The program is designed to follow up on results of a fall 2017, ultralight drilling program, and has focused on the Shakt-Davis mine.
Location of Past Completed Drill Program and Proposed DrillingFigure 2: Location of Past Completed Drill Program and Proposed Drilling
The historic mine is hosted by a relatively wide laterally extensive fracture zone hosted in a diabase dyke. Drilling is designed to test both the consistency and depth extent of cobalt mineralization in this structure.
In a bid to fund future drilling and property acquisitions, Power Americas Minerals has retained Canaccord Genuity Corp. and Gravitas Securities Inc. to act as co-lead agents in connection with a brokered private placement of up to 3.3 million flow-through common shares at $0.15 per flow-through share, and 13.3 million non-flow-through units at the same price. Each unit consists of one common share of the Company and one common share purchase warrant exercisable into one common share of the Company at $0.25 per warrant for a period of 36 months from the closing date. Gross proceeds are expected to be $2.5 million and the deal is anticipated to close on or about May 4, 2018.
In a telephone interview from Thunder Bay, Mr. Pettigrew said investors should expect Power Americas Minerals to pick up more ground in the Cobalt area.
Power Americas' acquisition strategy focuses on acquiring affordable, cost effective and highly regarded mineral properties in areas with proven geological potential. These are areas that feature historical and currently producing mines with historical infrastructure.
The strategy includes acquiring 100% interests in mineral properties, with no payment terms or work program commitments that would threaten a junior mining company's financial stability.
To find out more about Power Americas Minerals, please visit the company's Investor Hub.
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