Scientific Metals Corp. is pleased to announce that it has entered into an arm's length lease agreement with an option to acquire a 100% interest in the Iron Creek Cobalt Property in Lemhi County, Idaho, USA (the "Property"). The Property is located about 25 miles southwest from Salmon, Idaho and encompasses 137 acres in seven patented lode mining claims. The Company is currently expanding its land holdings to enlarge the Property to cover a minimum of 1,300 acres.
Brian Kirwin, President, commented: "The signing of this lease agreement on the Iron Creek Cobalt project is a very important step for Scientific Metals Corp. The Company believes that cobalt will continue to be a key component in the electrical battery revolution that is under way. Management is currently focused on expanding the current land package at the Property to provide additional leverage for companies such as Tesla who are seeking a geopolitically secure supply of this battery metal."
Under the terms of the lease agreement, STM has paid Chester Mining Company (the "Vendor") (OTC PINK:CHMN) the sum of US$45,000 and the Vendor has retained a 4% net smelter return ("NSR") in the Property. STM has agreed to pay the Vendor advance royalty payments on the NSR of US$3,000 per month for the first two years of the lease agreement, increasing to US$4,000 per month for the subsequent two years, and US$5,000 per month for subsequent years. At any time during the term of the lease, STM shall have the right to purchase a 100% interest in the Property and reduce the NSR held by the Vendor from 4% to 1%, all for consideration of a cash payment US$1,500,000. The NSR may subsequently be purchased by STM for a cash payment of US$500,000 for every 1% NSR elected to be acquired by STM. In connection with this transaction, a cash finder's fee shall be payable to an arm's length party in accordance with the policies of the TSX Venture Exchange.
A substantial amount of historical exploratory work has been completed on the Property, including approximately 30,000 feet of diamond drilling, and the mining of 1,500 feet of underground workings. Exploration by several companies since the 1940s, including Hanna Mining, Noranda Exploration, Inc. and Cominco, has identified a number of significant cobalt, a key component in Lithium-ion batteries, and copper targets on the Property. The Property is located in the most prolific trend of cobalt mineralization in the USA, the Idaho Cobalt Belt. The Property shares similar geology and structure with other deposits in the 40 mile long Idaho Cobalt Belt, including the Blackbird Mine and the proposed Idaho Cobalt Mine (Formation Metals).
The Property hosts a historical estimate of 1,050,000 tons grading 0.61% cobalt in the first lense and 229,000 tons grading 0.48% cobalt in the second lense. In a report entitled "Iron Creek Prospect, Lemhi County, Idaho (#0483) Progress Report" by Terry A Webster and Thomas K Stump for Noranda Exploration, Inc., July 1980 (the "Noranda Report"), two underground targets in the No Name Zone were evaluated. The first lense is described by Noranda Exploration, Inc.as a "possible reserve" and is reported to contain 1,050,000 tons grading 0.61% cobalt over a strike length of 750 feet. The second lense is described as a "possible reserve" and is reported to contain 229,000 tons grading 0.48% cobalt over a strike length of 600 feet. Together, these lenses contain 1,279,000 tons grading an average of 0.59% cobalt. The Noranda Report notes the following outstanding cobalt intercepts within the mineralized lenses. Drill hole IC-16 contains a 15 foot wide horizon averaging 1.01 percent cobalt, and within the Little No Name adit a 20 foot wide channel sample contains an average of 0.95 percent cobalt.
The Property also hosts a historical estimate of 4.57 million tons grading 1.84% copper. This historical estimate is from the Noranda Report that notes that, in the west zone of the No Name Zone, there is the presence of 4.57 million tons grading 1.84% copper "possible reserves" or similar.
The Company is treating the cobalt and copper tonnage and grade estimates above as historical estimates. The historical estimates do not use categories that conform to current CIM Definition Standards on Mineral Resources and Mineral Reserves as outlined in National Instrument 43-101, Standards of Disclosure for Mineral Projects ("NI 43-101") and have not been redefined to conform to current CIM Definition Standards. They were prepared in the 1980s prior to the adoption and implementation of NI 43-101. The Noranda Report does not detail cut-off grades and metal prices used to estimate the historical mineralization and used a tonnage factor of 11 cubic feet per ton. A qualified person has not done sufficient work to classify the historical estimates as current mineral resources and the Company is not treating the historical estimates as current mineral resources. More work, including, but not limited to, drilling, will be required to conform the estimates to current CIM Definition Standards. Investors are cautioned that the historical estimates do not mean or imply that economic deposits exist on the Property. The Company has not undertaken any independent investigation of the historical estimates or other information contained in this press release nor has it independently analyzed the results of the previous exploration work in order to verify the accuracy of the information. The Company believes that the historical estimates and other information contained in this press release are relevant to continuing exploration on the Property.
Management of the Company is relying on the historical estimates contained in the Noranda Report because the authors were experts and used industry standard procedures at the time. The historical estimates are relevant to the Company's planned exploration program because they identify significant mineralization that will be the target of this exploration program.
Mr. Garry Clark, P. Geo., of Clark Exploration Consulting, is the "qualified person" as defined in NI 43-101, who has reviewed and approved the technical content in this press release.