Somerset Minerals Signs Earn-In Agreement with Blackdome Mining for Blackdome-Elizabeth Project
SMM (SMM) Share Update September 2024 Sunday 29th
Somerset Minerals Announces Earn-In Agreement for Blackdome-Elizabeth Project
Somerset Minerals Ltd (ASX: SMM) has announced a significant step forward in its strategic focus on copper and base metals by signing an Earn-In Agreement with Blackdome Mining Ltd for the staged divestment of the Blackdome-Elizabeth Project in British Columbia, Canada.
Instant Summary:
- Somerset Minerals signs Earn-In Agreement with Blackdome Mining Ltd.
- The agreement involves the staged divestment of the Blackdome-Elizabeth Project.
- Total cash consideration is approximately C$150,000 (~A$165,000).
- Somerset to receive a 0.5% net smelter royalty upon completion.
- Focus shifts to copper and base metals strategy, including Prescott Base Metals Project.
Agreement Details
Somerset Minerals Ltd (ASX: SMM) has entered into an Earn-In Agreement with Blackdome Mining Ltd for the staged divestment of the Blackdome-Elizabeth Project, located in British Columbia, Canada. This strategic move allows Somerset to prioritize its copper and base metals strategy, including the recently acquired Prescott Base Metals Project in Nunavut, Canada.
Under the terms of the Agreement, Blackdome Mining will pay Somerset a total cash consideration of C$150,000 (~A$165,000). This includes an initial upfront payment of C$100,000 and a subsequent payment of C$50,000 on or before the second anniversary of the Agreement.
Staged Earn-In Process
The Earn-In Agreement is structured in three stages:
- First Earn-In Interest (60%): Blackdome Mining will acquire a 60% interest by paying C$100,000 upfront, spending C$250,000 on project expenditures, and making an additional C$50,000 payment to Somerset.
- Second Earn-In Interest (80%): Blackdome Mining can acquire an additional 20% interest by incurring a further C$250,000 in project expenditures within two years of completing the First Earn-In.
- Third Earn-In Interest (100%): Blackdome Mining can acquire the remaining 20% interest by funding an additional C$500,000 in project expenditures within two years of completing the Second Earn-In.
Joint Venture and Royalty
Upon completion of the first earn-in stage, Somerset and Blackdome Mining will enter into a Joint Venture Agreement (JVA). If either party's interest in the project falls below 10%, it will be converted to a 0.5% net smelter royalty. This royalty can be bought back at any time by the non-diluted party for C$25,000.
Managing Director Chris Hansen commented, 'The staged divestment of the Blackdome-Elizabeth Project not only strengthens our financial position but also allows the Company to focus on advancing our copper and base metals strategy, including the recently acquired Prescott Base Metals Project.'
The divestment of the Blackdome-Elizabeth Project allows Somerset Minerals to streamline its focus on copper and base metals, which could positively impact the company's stock by reducing holding costs and providing additional funding. The 0.5% net smelter royalty ensures future revenue from the project, adding a layer of financial security.
Investor Reaction:
Analysts are likely to view this move as a positive step for Somerset Minerals. The reduction in holding costs and the focus on high-potential base metal projects could improve investor sentiment. However, the relatively modest cash consideration may temper some enthusiasm.
Conclusion:
Investors should keep an eye on Somerset Minerals' progress with its copper and base metals strategy, particularly the Prescott Base Metals Project. The staged divestment of the Blackdome-Elizabeth Project is a strategic move that aligns with the company's long-term goals.