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EMX Royalty Corp. (BMX.V)  has executed a purchase agreement for the Guldgruvan cobalt project in Sweden with Boreal Energy Metals Corp. (BEMC), a newly created and wholly owned subsidiary of Boreal Metals Corp. The agreement provides EMX with immediate share equity in BEMC, a 3-per-cent net-smelter-return royalty on the project and annual advance royalty payments. The Guldgruvan project is located in Sweden's Los mining district, a significant historic producer of cobalt and nickel. The Los district was a key source of cobalt locally used for pigments in the 17th and 18th centuries, and is the discovery locality of nickel.

Commercial terms overview

Pursuant to the agreement, the Guldgruvan nr 101 licence will be transferred to BEMC in exchange for the issuance of shares of BEMC, a royalty interest on the project, and other considerations according to the terms described below:

  • At closing, BEMC will issue to EMX that number of common shares of BEMC that represents a 5.9-per-cent equity ownership in BEMC. BEMC will have the continuing obligation to issue additional shares of BEMC to EMX to maintain its 5.9-per-cent interest, at no additional cost to EMX, until BEMC has raised $3-million in equity. Thereafter, EMX will have the right to participate pro rata in future financings at its own cost to maintain its 5.9-per-cent interest in BEMC.
  • EMX will receive an uncapped 3-per-cent NSR on the project. Within five years of the closing date, BEMC has the right to buy down up to 1 per cent of the royalty owed to EMX (leaving EMX with a 2-per-cent NSR) by paying EMX $2.5-million (U.S.) in cash and shares of BEMC.
  • EMX will receive annual advance royalty (AAR) payments of $20,000 (U.S.) commencing on the second anniversary of the closing, with each AAR payment increasing by $5,000 (U.S.) per year until reaching $60,000 (U.S.) per year. Once reaching $60,000 (U.S.), AAR payments will be adjusted each year according to the Consumer Price Index (as published by the U.S. Department of Labour, Bureau of Labour Statistics).
  • EMX will also be reimbursed for its acquisition costs and previous expenditures on the project.
  • The issuance of BEMC shares to EMX, as set forth in the agreement, is subject to TSX Venture Exchange approval.

Project overview

The 2,383-hectare Guldgruvan nr 101 licence covers the historic Los Cobalt mine, one of the better-known historic cobalt producers in the region and is also the site where nickel was first discovered and recognized as an element in 17511. The project contains multiple historic mining areas with underground workings, test pits and shallow drill holes. Cobalt, copper and nickel were mined on the property from the 1600s through the 1750s. In addition to these metals, gold, silver, zinc and lead are also present in zones of mineralization. Guldgruvan, like other EMX and Boreal projects in the region, has seen only limited modern exploration.

In the Los mining district, cobalt-rich, polymetallic sulphide mineralization occurs as veins and replacement-style mineralization hosted within Proterozoic mafic and felsic metavolcanic and metasedimentary rocks, including carbonate facies. Where carbonate rocks have been mineralized, zones of skarn are commonly developed. The cobalt-bearing occurrences define a series of north-northwest-trending zones of mineralization that run parallel to geological contacts, fold axes and faults. The mineralization is known to extend for at least six kilometres along strike within the licence area and is not constrained at depth.

In addition to cobalt-rich sulphide mineralization, gold mineralization is known to occur on the Guldgruvan property and appears to be spatially associated with shear zones that also display fuschite mineralization (a brilliant green chromium-bearing mica), reminiscent of similar styles of alteration and mineralization seen in many shear zone-hosted lode gold deposits around the world.

The project is accessible year-round, with infrastructure including paved roads, water and power, as well as skilled labour in nearby municipalities.

The agreement with BEMC is another example of the execution of EMX's royalty generation business model. The direct and indirect ownership in BEMC (which includes EMX's 19.9-per-cent position in BEMC's parent company, Boreal), gives EMX and its shareholders immediate exposure to equity upside, while the royalty interests provide longer term exposure to mineral production revenues and the optionality of continued exploration success and discovery.

Dr. Eric P. Jensen, CPG, a qualified person as defined by National Instrument 43-101 and employee of the company, has reviewed, verified and approved the disclosure of the technical information contained in this news release.

About EMX Royalty Corp.

EMX leverages asset ownership and exploration insight into partnerships that advance its mineral properties, with EMX receiving preproduction payments and retaining royalty interests. EMX complements its royalty generation initiatives with royalty acquisitions and strategic investments.