District Metals (DMX.V) has confirmed its Swedish subsidiary has entered into an agreement with senior producer Boliden whereby both companies will team up to advance the Tomtebo and Stollberg properties, both located within trucking distance from Boliden’s operating Garpenberg mine and mill.
Initially, Boliden has been granted the right to earn a stake of up to 85% in District Metals’ Tomtebo property, which was the flagship asset of the company. Once Boliden exercises its earn-in option, the Tomtebo asset will be rehomed in a new joint venture together with the Stollberg asset (owned by Boliden) whereby District Metals will end up with 15% of the joint venture (which means District will retain a 15% stake in Tomtebo as well as Stollberg).
The Stollberg project is just 35 kilometers away from the Tomtebo asset, and is located just 50 kilometers west from te Garpenberg mine which is currently owned and operated by Boliden. The Stollberg mineralized trend has been mined for several centuries and the most reliable data point towards a total of almost 7 million tonnes of rock that have been mined from the Stollberg project.
Before Boliden can exercise the option to earn its 85% stake in the Tomtebo asset, it is required to spend at least C$10M on exploration on both the Tomtebo and Stollberg assets before the end of October 2027. In order to protect its own interests, District has confirmed there is a minimum of C$3M that will have to be spent on the Tomtebo project. Once the C$10M has been spent the aforementioned joint venture company will be formed with Boliden as 85% owner and District Metals as 15% owner. District will also be the operator during the C$10M earn-in phase and that is good news as it will likely generate a few hundred thousand Canadian Dollar per year in operator fees which will help to cover the overhead expenses in Sweden.
This appears to be a good deal, especially as District Metals has been moving in the direction of assembling a portfolio of uranium properties in Sweden as it anticipates the current moratorium on uranium exploration and mining to be lifted. This means that District will be able to spend its own cash on the uranium assets while Boliden will cover the exploration expenditures on Tomtebo (and Stollberg).
Disclosure: The author has a long position in District Metals. District is a sponsor of the website. Please read the disclaimer.
