Puget Ventures set to become Global Cobalt

Within weeks, Puget Ventures (PVS-V) expects to complete a fundamental transformation from a modest Ontario-focused cobalt explorer into a global player, with a new name, new financing and a new focus on the Altai Republic in southern Russia.

“Sometime in early August we will come out . . . as Global Cobalt, funded and drilling in the Altai,” Erin Chutter, president and founder of Puget Ventures, says by phone. “It is a big, big change for us to turn into Global Cobalt.”

The change is close to a year in the making, and has involved clearing multiple regulatory hurdles in both Russia and Canada, as private and Europe-based Imperial Mining Holding completes a reverse takeover of Puget and the two combine properties for exposure to Russian, Mongolian and Canadian projects.  

The deal includes Puget issuing 40 million shares to Imperial Mining, plus 80 million special warrants to be released when size thresholds are met on the flagship Karakul cobalt project. The full release of warrants happens once 80,000 tonnes of cobalt has been defined in a compliant resource.

Puget also has to complete a $16-million financing, down from $20 million in December. The financing is at $1.05 per unit, with each unit holding one share and half a warrant exercisable at $1.50. Puget had a closing price of 49¢, with 33 million shares out when it was halted last September after the deal was announced. The company’s shares have been halted ever since. The deal is also contingent on the restructured company getting a TSX main board listing.

The Soviets explored the 4.6-sq.-km Karakul project in the 1970s and 1980s, and established a historic, non-compliant resource in 1985 of 10 million tonnes oxide and sulphide mineralization in the C2 category, and 20,000 tonnes of cobalt and 46 million tonnes in the P1 category, with 83,000 tonnes of cobalt. Both resources also contained bismuth, copper and tungsten. The C2 resource had gold and silver. 

The current technical report on the project emphasizes that the Russian system, under which the resource estimates were made, should not be relied upon for quantities and grades, and were only included to show potential dimensions and continuity of the zones. The hydrothermal deposit’s mineralization consists of several zones of brecciation ranging from a few metres to 30 metres thick. In total, 25,000 metres have been drilled on the project.

Chutter says the extensive Soviet exploration in the area presents a significant opportunity.

“We can go into projects that have had, in today’s dollars, $30 or $40 million of work done on them, and we can just put them over the line.”

Puget’s president was also excited that Karakul was not a one-off project, but one of several within 20 km of each other. The company has since secured a first right of refusal on five other projects in the region it later plans to fold into Global Cobalt.

“They’re projects that the government of Altai saw as the ignition for an industrial mining
sector in their country,” Chutter says. “That really establishes us as a leading player in this brand new region where the exploration risk was already eaten up by the Soviet Union.”

Further helping Puget, the Republic of Altai and the Russian government have committed $475 million in infrastructure spending over the next five years to promote mining and investment in the area.  

Chutter explains that the area, nestled between Kazakhstan and Mongolia, had long been propped up by the central Soviet government and was slower than its neighbours to attract foreign capital. It is now playing catch-up.

“It’s only in the last four or five years that they’ve looked west at Kazakhstan and east at Mongolia and said, ‘this is crazy, we have the same types of deposits on our state balance sheet, our reserves, let’s see how we can attract foreign investment.'”

As to working in Russia, Chutter says the process has gone smoothly so far. The company managed to secure official approval of the change of ownership deal, which was required since cobalt is considered a strategic asset. Global Cobalt is bringing on management and staff with extensive experience in the area, and the company will also have the European Bank for Reconstruction and Development as a 10% shareholder, which should help provide support.

Chutter notes that the area is quite removed from the politics of Moscow.

“We’ve had a very positive experience,” Chutter says, “partly I think because we’re not in Russia, Russia – we’re in this region called the Altai. It’s sort of a semi-autonomous region.”

Puget shareholders got a chance to voice their opinion on the deal at a special July 21 meeting and voted in favour of it. If everything else goes as planned, the newly formed Global Cobalt will shortly start drilling 30,000 metres, and have a compliant resource estimate by early next year.