European Electric Metals Inc. agreed to acquire Gerold Sh.pk., owner of the past-producing Skroska iron-nickel mine in Albania, for €5.4 million in cash and shares.
The amount, to be paid over three years, comprises Gerold's shares worth €3.0 million and loan due from Gerold worth €2.4 million. Gerold will retain a 1.5% net smelter royalty, which can be bought back for €1.5 million.
Skroska's operations are covered by a 20-year mining license obtained by Gerold in 2008. The mine has been put on care and maintenance since 2013 due to low nickel prices.
Apart from restarting the mine, European Electric Metals said Oct. 11 that it will also target to confirm and expand the historical resource through drilling and undertake a study to evaluate an expansion of the previous mining rate.
A due diligence study will be conducted within four months to determine if mining operations can be restarted within six to 12 months.
The company added that a high-grade cobalt is present in the mine, based on its assays that yielded up to 0.54% cobalt.
"This transaction represents a major step towards our goal of becoming an ethical source of high-grade cobalt production, within a European setting," CEO and director Fred Tejada said.