Puget Ventures Inc. – Focused on Developing a New Mining District as Global Cobalt Corp.
Overview
Puget Ventures Inc. (TSXV:PVS) is in midst of a game-changing expansion of the company and upon completion of the previously announced Pafra Acquisition, will be renamed Global Cobalt Corporation (“Global Cobalt” and/or the “Company”). The newly formed critical metals company will compliment existing Canadian assets with the acquisition of a set of assets in Altai, Russia as part of the Pafra Purchase Agreement with Imperial Mining Holdings Limited (IMHL). The acquisition of the Altai assets, including the primary-cobalt Karakul Cobalt Project, with known size and scale as well as potential suggests a significant cobalt asset, will establish the Company in Central Asia.
As first mover into this new territory, the newly formed Puget Ventures (Global Cobalt Corp.) will position itself as a pioneer in an untapped region as the first and only foreign-invested publicly traded mining company to advance mineral projects in the Altai Republic. Puget Ventures (Global Cobalt Corp.) will leverage the world-class Karakul Project and intends to explore other economically feasible projects held under right-of-first-refusal while aggressively expanding and exploring existing properties to supply the growing demand for cobalt and other strategic metals.
Investment Highlights
- Recognizing the importance of critical metals to clean technology and alternative energy systems, Puget Ventures (Global Cobalt Corp.) through the acquisition and advancement of tactical mineral assets is positioning itself as a leader to ensure a stable, diversified access to these essential metals.
- The Company is uniquely positioned due to relationships in the region, tactical partnerships, experienced team and an excellent asset base to become an emerging producer and key player in Central Asia.
Key Properties
Russia – Karakul Cobalt Project, Altai Satellites
Puget Ventures (Global Cobalt Corp.) recognizes the market opportunity and attractiveness of having an interest in a country that is developing into a worldwide power centre in the mining industry.
Upon completion of the Pafra Transaction, the Company will actively be involved in the advancement of the assets it will acquire in Russia and aims to create business opportunities and long term relationships in the communities it conducts operations.
Puget Ventures’ (Global Cobalt Corp.) flagship asset will be the Karakul Cobalt Deposit in the Republic of Altai, Russia. Significant undertakings have been made on this deposit over the past few decades with the potential of it becoming the largest known primary cobalt asset outside of Africa.
Plans have been outlined to accelerate confirmation of resources and fast-track development of the project to supply the growing demand for cobalt.
Puget Ventures (Global Cobalt Corp.) envisions advancing its newly assembled portfolio of highly prospective projects in the mineral rich Atlai region into a new mining jurisdiction focused on cobalt and other strategic metals.
Karakul Cobalt Deposit
The Karakul Cobalt Deposit is a primary cobalt deposit located in the pro-mining and mineral rich region of Russia’s Altai Republic. Historic (non NI 43-101) Russian estimates suggest 14.9 million tonnes of 0.26% cobalt equivalent in nine sulphide bodies with potential expansion on strike and at depth. Located in the southern region of the Republic of Altai in the Russian Federation, it is approximately 5km from the border with Mongolia,with access by air to Barnaul and then by regional paved highway through the towns via Byisk, Gorno-Ataisk and Koch Agach. A well-maintained dirt road connects the project site from the highway. The local terrain comprises rolling hills with rugged mountains that rise along the Mongolian border — climatic conditions reflect the central continental location and high elevation of the steppe area.
Kosh Agach is serviced by a 110-kilovolt power line with spare capacity that terminate in close proximity (18km) to the project. Although still in a preliminary discussion stage, a natural gas pipeline may be constructed between Russia and China. The regional highway M52, paved and in good state, passes in close vicinity to the Karakul Project and could be modified to support large transport vehicles. The closest railway station is in Byisk, connected to the project via the regional highway, and is approximately 620 kilometres from the deposit.
Between 1955 and 1973, various expeditions conducted reconnaissance geological work in the large area comprising Karakul, and between 1978 and 1985 the state-sponsored Kurai Expedition explored in more details the Karakul area, leading to the discovery of thirty separate suplhide bodies containing bismuth, copper, tungsten, gold and silver mineralization. In 2006 RuMetall commissioned the Siberian Scientific-Research and Projecting Institute of Base Metallurgy to complete a feasibility study for the karakul Exploration Project. This study included a re-evaluation of the mineral resources based on historical data. The drilling information collected by RuMetall was not included in this study. Exploration work in 2007 and 2009 focused on the Western Zone and the northern part of the Eastern Zone. Various engineering studies were completed to evaluate the feasibility of an underground mine project at Karakul. In 2008, 106-diamond boreholes totaling 16,768 metres were drilled. Ten short large diameter boreholes were also drilled to test the permafrost soil and its corrosiveness to concrete.
Mineral resources were estimated for nine distinct zones in the Western Zone using a polygonal approach on longitudinal sections. Polygon boundaries were defined at mid-point between drilling or underground sampling to a maximum distance of 150 metres. Polygons were assigned an average grade based on the weighted average grade of the samples intersecting each polygon. Mineral resources were classified in the C1 and C2 category and were reported at three cobalt equivalent grades (0.075, 0.1 and 0.125 percent) assuming metal pricing assumptions of the time. The historical C1 and C2 mineral resources are reported below.
The reader is cautioned that Russian system of evaluation of mineral resources and the feasibility of projects differs from international reporting guidelines (e.g. JORC or National Instrument 43-101). A qualified person has not verified the resource evaluation methodology or the reliance on historical data. As a result the Russian resource estimates and the economic feasibility that are considered historical should not be relied upon. The historical Russian estimates are presented solely to demonstrate that sufficient exploration work was completed on the Karakul project to demonstrate the potential dimensions of the polymetallic sulphide zones (strike and depth) and their relative continuity. The quantities and grade estimates should not, however, be relied upon.*
*For a detailed description of the Karakul project, visit the company’s profile on SEDAR and refer to the Technical Report prepared by SRK Consulting on the property as part of due diligence under the Pafra Transaction.
The Karakul Cobalt Deposit is an advanced stage exploration project with near term producing potential. Exploration project design for both the Western and Eastern Zones have been completed along with a baseline social and environmental study meeting Equator Principles. Extensive metallurgical work has been carried out to support the preparation for the most recent resource calculations using a non NI 43-101 compliant Russian resource disclosure system.Note: The reader is cautioned that the figures presented in this table are historical in nature, have not been verified by a Qualified Person and should not be relied upon. Puget are not treating them as current. Historical Mineral Resources estimated by the “Siberian Scientific-Research and Projecting Institute of Base Metallurgy” in 2006.
* Reported at a cut-off grade of 0.1 percent cobalt equivalent. Co eq.
** Cobalt equivalent grade considering the metal price assumptions discussed in text.
Summary of Exploration Work Completed by RuMetall:
| Work Performed | 2007 | 2008 | 2009 |
|---|---|---|---|
| Topographical Survey | Complete | ||
| Engineering Studies | Complete | ||
| Metallurgical Study | Complete | ||
| Eastern Zone Assessment | Complete | ||
| 106 Core Boreholes | 16,768 metres | ||
| Downhole Geophysical Survey | On approx. 80 diamond drill holes | ||
| Geochemical Assays | 2,021 | ||
| 3D Geological Modeling | Complete |
SRK Consulting was procured to conduct a technical report in 2010 on the merit of the Karakul project and it was determined that it be characterized as an advanced exploration property with recommendation for additional exploration and pre-development expenditures. The recommended work program designed by SRK would validate historical exploration work, delineate the polymetallic suplhide mineralization, evaluate mineral resources and prepare an initial mineral resource statement that will satisfy National Instrument 43-101 guidelines and examine at a scoping level the viability of a conceptual mine on the Karakul Project.
Strategic Partnerships
THE EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD)
The EBRD is the largest financial investor in the region of operations, which stretches from central Europe and the Western Balkans to central Asia. It is owned by 61 countries, the European Union and the European Investment Bank. Russia has been a member since 1992 with the EBRD involved in over 600 projects in Russia to date with over €46 billion in total project value. Major shareholder of IMHL and will be participating in upcoming financing.
STRATEGIC FUNDING PARTNERSHIP WITH CITIC SUBSIDIARY BEIJING AXHA INVESTMENT CO. FOR DEVELOPMENT ON THE KARAKUL COBALT PROJECT
The company has entered into a strategic partnership with Beijing AXHA Investment Co. (“Anhua”) whose parent company is CITIC Anhua Group (Holding by CITIC Group).
Under the terms of a Memorandum of Understanding (the “MOU”), Anhua will arrange for financing and the selection of a major Chinese EPC contractor, agreed upon by Puget Ventures, to develop a bankable feasibility study for the Karakul Cobalt Project (“Karakul”) in Altai, Russia and provide subsequent debt financing under a joint venture arrangement.
Highlights of this strategic partnership under the terms of the MOU, which is subject to, amongst other things, the completion of the Pafra Transaction and the parties entering into a definitive agreement, include:
- Anhua to nominate EPC contractor for the Karakul project with agreement of Global Cobalt.
- Anhua and the EPC contractor to work with a technical and business team from Global Cobalt to develop a Bankable Feasibility Study, subject to a completed scoping level study prepared at the cost of the EPC contractor.
- Anhua to arrange for an off-take agreement for the products of the Karakul Project with a major Chinese processor, subject to the approval of Puget Ventures
- Anhua to arrange for the full financing for the EPC contract for the Karakul Project
- Global Cobalt to agree to pledge the mining rights of the Karakul mine or the shares of the company that is holding the mining rights of the Karakul mine against the debt instrument
- Global Cobalt to issue common share purchase warrants to Anhua based on outcomes of scoping study proposal.
MOU SELECTING CHINA ALUMINUM INTERNATIONAL ENGINEERING CORPORATION AS EPC CONTACTOR FOR THE DEVELOPMENT OF THE KARAKUL COBALT PROJECT
The Company announced that it has accepted the recommendation of Anhua to sign an MOU with China Aluminium International Engineering Corporation Limited (“CHALIECO”) as EPC contractor to develop the Karakul Cobalt Project (“Karakul”) in Altai, Russia upon completion of the Company’s previously-announced acquisition of Pafra Enterprises Company Limited (“Pafra”). CHALIECO is a subsidiary of China Aluminum Corporation (CHINALCO).
Anhua has nominated CHALIECO, a premier Chinese contractor, who has been selected to render technical and construction services for the development of the Karakul project.
On completion of the Pafra acquisition, Global Cobalt and CHALIECO will work towards the development of the Karakul Cobalt Project in accordance to a preliminary plan of action, which will include, amongst other items, a scoping level technical proposal and analysis and, given favourable findings, a bankable feasibility study. Subject to positive bankable feasibility study and project finance through Anhua, CHALIECO will proceed in role as EPC contractor for the project construction and commissioning.
Altai Satellites
Although the Karakul Cobalt Deposit in the Altai Republic will be Global Cobalt’s flagship asset and priority for advancement, four additional assets, collectively known as the Altai Satellites, will transfer to the Company at the closing of the Transaction with IMHL.
These Altai Satellites are part of the Company’s growth strategy in creating a mining district in the Altai Region of Russia. The Company will actively pursue early and advanced stage opportunities in the region and to develop properties with good economics to allow for future growth.
The proximity of these Satellite properties to the Karakul Cobalt Deposit adds the possibility of an extension to the main ore bodies providing significant upside to the creation of a new mining jurisdiction in Altai.
Mongolia
Mongolia is a landlocked expanse of Asian prairie and desert, trapped and isolated between Russia and China, a country that, until very recently, has experienced very little economic development let alone contact with the Western World. Today, Mongolia is the epicenter of prospecting potential because of its fortuitous proximity to its neighbouring superpowers.
The Mongolia mining boom is at its genesis – fuelled by investor-friendly mining laws, a free-market economy, new mineral discoveries and the rapidly spreading realization that Mongolia can become a supplier of raw materials to the world and more importantly feed the Chinese hunger for metals demand due to the rapid rise of Chinese manufacturing.
Global Cobalt recognizes the potential and advantages of Mongolia, its incredible mineral wealth, able work force and proximity to China and Russia, and as part of its mandate to secure premium properties that complement its project portfolio has acquired several base and precious metal assets in the north-western provinces of Mongolia.
Canada
As a Vancouver-based, Canadian company, Puget Ventures soon to be Global Cobalt, has strong ties to the mining and metals industry in Ontario and envisions corporate growth through acquisitions of domestic assets within the strategic metals sector.
Canada is host to a vast array of mineral wealth and the Company is positioning itself to become a pillar in the cobalt market through the advancement of its 100% owned Werner Lake Deposit in north western Ontario.
As one of North America’s only near term primary cobalt producer, Global Cobalt is on the forefront of developing into one of the key strategic metals player in a home-stage global mining jurisdiction.
Werner Lake Mineral Belt
The Werner Lake Mineral Belt is Global Cobalt’s Canadian based priority asset and provides the nearest term primary-cobalt in Canada. The land package stretches 60km along highly mineralized strike and consists of approximately 1,700 hectares located in the Kenora Mining District in Northwestern Ontario. Historic non NI 43-101 compliant reserves and resources total 1.1 million tonnes of 0.31% cobalt, 0.29% copper and 0.011 opt gold. The Werner Lake Mineral Belt covers two past producers and at least five historic deposits including three extremely rare primary cobalt deposits and two significant nickel-copper-PGE deposits. Global Cobalt aims to further advance the Werner Lake Cobalt Deposit and provide a NI 43-101 compliant resource estimate with near-term production decision.
Historic Data: Reserves & Resources: Werner Lake West and Old Mine Site
Proven Reserves: 140,031 tonnes of 0.475 Co; 0.26% Cu; 0.008 oz/t Au
Probable Reserves: 40,829 tonnes of 0.25% Co; 0.43% Cu; 0.003 oz/t Au
Indicated Resources: 51,456 tonnes of 0.13% Co; 0.26% Cu; 0.003 oz/t Au
Inferred Resources: 507,412 tonnes of 0.31% Co; 0.29% Cu; 0.011 oz/t Au
| Category1 | Mining Area2 | Tonnes | Co % | Cu % | Au opt |
|---|---|---|---|---|---|
| Proven Reserve | Lenses 1&2 | 17,145 | 0.46 | 0.14 | 0.022 |
| Proven Reserve | Lens 3 | 34,476 | 0.72% | 0.3 | 0.005 |
| Proven Reserve | West Cobalt | 82,210 | 0.37 | 0.27 | 0.06 |
| Proven Reserve | Stockpile3 | 6,200 | 0.5 | 0.3 | 0.09 |
| Probable Reserve | West Cobalt | 40,829 | 0.25 | 0.43 | 0.03 |
| Indicated Resource | West Cobalt | 51,456 | 0.13 | 0.2 | 0.03 |
| Inferred Resource | West Cobalt | 363,647 | 0.37 | 0.27 | 0.006 |
| Inferred Resource | West Cobalt | 430,663 | 0.18 | 0.29 | 0.015 |
| Inferred Resource | Minesite | 55,068 | 0.63 | 0.24 | 0.011 |
| TOTAL | 1,101,694 | 0.31 | 0.29 | 0.011 |
Management
Erin Chutter – President, CEO, and Director
Prior to founding Puget in 2007, Ms. Chutter provided business-consulting services to a wide variety of public and private companies in the natural resources sector. Ms. Chutter has held various positions for federal and provincial government officials, and sits on the Boards of the Canadian Taxpayer’s Federation and the MacDonald Laurier Foundation, as well as the Boards of two other listed companies. Ms. Chutter was recently inducted as a 2011 Business in Vancouver Top 40 Under 40 achievement award winner.
Ray Castelli – Director
Mr. Castelli was appointed CEO of Weatherhaven, one of the world’s leading manufacturers of redeploy able camps and shelter systems, in January 2008 and has grown it to become a key supplier to the Canadian, US, Australian and NATO armed forces, numerous resource exploration companies as well as the United Nations and other disaster and humanitarian relief agencies. He was the co-founder and Senior Vice President of Quadrem, a Dallas-based global supply chain and e- procurement company, serving 19 of the world’s largest natural resource companies, including Rio Tinto, BHP Billiton, Alcan and Inco. Mr. Castelli was also one of six Canadian business leaders named to a new Canada-Brazil CEO Forum to foster trade growth and investment ties between the two countries
Jean-Pierre Colin – Director
Mr. Colin provides a creative corporate strategy consulting services to high profile international mining companies. He has 30+ years of investment banking experience with a proven track record of advancing mining projects
through to successful development. Mr. Colin is the Director of Premier Gold Mines and is special advisor to the Executive Chairman and Board of
BlackRock Metals Inc.
Peter Reynolds – Director
Mr. Reynolds is engaged by EBRD to carry out reviews of EBRD’s investments for several projects in Mongolia and Russia and is the EBRD’s nominated Director on the Board of IMHL. He has nearly 40 years in the minerals industry, with high-level experience at various mines including being former Manager of Operations Planning & Mine Projects/Manager Mine Business Improvement at Olympic Dam and was former Managing Director Marlborough Resources as well as Mining Engineer Normandy Mining.
Wilson Russell – Director
Dr. Russell has a doctorate in Engineering Physics, Marseille, France with over 30 years experience in business and technology development in the Offshore Petroleum and Ocean industries. He is the President of Northstar Electronics and Northstar Technology (manufacturer of ocean sonar equipment for Lockheed Martin).
Bagrat Safarian – Director
Mr. Safarian is the current Managing Director of RnB Capital. He was the Director of Investment Banking at CentralInvest Inc. from 2004 to 2008 and a Senior Consultant
of PA Consulting from 2000 to 2002
Marc Thomas, Director Global Cobalt. He is a General Director and Partner of Industrial Solutions and Technologies, a technology company that represents European and American manufacturers in the Russian marketplace. Mr. Safarian’s strategic and commercial skills developed through leading regional turnarounds for Blue Chip FMCG Multinationals. He specializes in business strategy, team building, development and management of sales teams, trade marketing and Key Account Development.
Dr. Michael Hitch, PhD, P.Geo. – Technical Advisor
Dr. Hitch is a highly respected senior executive with over 25 years of international experience in the minerals sector and has been a senior executive with major mining companies around the world including AngloGold Ashanti Limited, Echo Bay Mines Ltd and Ivanhoe Mines. Dr. Hitch has many years of experience building and financing junior resource companies and has a great deal of knowledge in resource and reserve management, mine development and exploration, and is proficient in strategic planning.
Dr. Hitch holds Bachelor’s and Master’s degrees in Geology and a Ph.D. in Environmental and Resource Studies. He is currently an Assistant Professor with the Norman B. Keevil Institute of Mining Engineering at the University of British Columbia, with a research focus on mine optimization, project economics and mine design. Michael is on the Board of Directors and Senior Technical Advisor of Resinco Capital Partners, a global investment company which specializes in providing early stage financing to private and public exploration and mining companies in the hard rock minerals, precious metals, rare-earth minerals, oil, gas, water and renewable energy markets.
Most recently, he held the position of President and Chief Executive Officer for Kao Diamonds in London, UK. Dr. Hitch successfully reorganized the corporation and supervised the engineering and pilot plant development at the Kao diamond deposit in Lesthoto, Southern Africa. In his role as Executive Chairman to TSX-listed Golden China Resources Corp., Dr. Hitch focused on gold exploration and development of the Beyinhar and Nibao gold deposits in Guizhou Province, China. He was also responsible for merchant banking in the evolving precious metals industry of the People’s Republic of China.
Previously, he held positions as mining analyst for Clarus Securities Inc. and Octagon Capital Corporation, and served as Executive VP Corporate Development for Ivanhoe Mines Ltd., AngloGold Ashanti, Echo Bay Mines Ltd., and Teck Resources. Dr. Hitch is also a registered Professional Geoscientist (Alberta and British Columbia) and a Professional Engineer (British Columbia), allowing him to act as a Qualified Person as defined by NI 43-101.
