Scientific Metals Corp. has entered into an arm's-length letter agreement with a private company providing STM with exclusive rights to enter into a lease agreement with an option to acquire a 100-per-cent interest in the Iron Creek cobalt property in Lemhi county, Idaho, United States. The property is located about 25 miles southwest from Salmon, Idaho, and encompasses 137 acres in seven patented lode mining claims.
A substantial amount of historical exploratory work has been completed on the property, including approximately 30,000 feet of diamond drilling and the mining of 1,500 feet of underground workings. Exploration by several companies since the 1940s, including Hanna Mining, Noranda Exploration Inc. and Cominco, has identified a number of significant cobalt, a key component in lithium-ion batteries, and copper targets on the property. The property is located in the most prolific trend of cobalt mineralization in the U.S., the Idaho cobalt belt. The property shares similar geology and structure with other deposits in the 40-mile-long Idaho cobalt belt, including the Blackbird mine and the proposed Idaho cobalt mine (Formation Metals).
The property hosts a historical estimate of 1,050,000 tons grading 0.61 per cent cobalt in the first lens and 229,000 tons grading 0.48 per cent cobalt in the second lens. In a report entitled, "Iron Creek prospect, Lemhi county, Idaho (No. 0483) progress report," by Terry A. Webster and Thomas K. Stump for Noranda Exploration, July, 1980, two underground targets in the No Name zone were evaluated. The first lense is described by Noranda Exploration as a possible reserve and is reported to contain 1,050,000 tons grading 0.61 per cent cobalt over a strike length of 750 feet. The second lense is described as a possible reserve and is reported to contain 229,000 tons grading 0.48 per cent cobalt over a strike length of 600 feet. Together, these lenses contain 1,279,000 tons grading an average of 0.59 per cent cobalt. The Noranda report notes the following outstanding cobalt intercepts within the mineralized lenses: drill hole IC-16 contains a 15-foot-wide horizon averaging 1.01 per cent cobalt and, within the Little No Name adit, a 20-foot-wide channel sample contains an average of 0.95 per cent cobalt.
The property also hosts a historical estimate of 4.57 million tons grading 1.84 per cent copper. This historical estimate is from the Noranda report that notes that, in the west zone of the No Name zone, there is the presence of 4.57 million tons grading 1.84 per cent copper possible reserves or similar.
STM's president, Brian Kirwin, stated: "The signing of this letter agreement is an exciting step for STM. The addition of a high-grade cobalt asset to our growing lithium portfolio allows STM to strategically position the company to supply modern battery manufacturers with much needed metals. The Iron Creek cobalt property is an excellent opportunity with significant cobalt mineralization and substantial upside potential already identified. We look forward to bringing this property forward towards production. I encourage you to view a short movie about cobalt at www.scientificmetalscorp.com
The company is treating the cobalt and copper tonnage and grade estimates above as historical estimates. The historical estimates do not use categories that conform to current CIM (Canadian Institute of Mining, Metallurgy and Petroleum) definition standards on mineral resources and mineral reserves as outlined in National Instrument 43-101, standards of disclosure for mineral projects, and have not been redefined to conform to current CIM definition standards. They were prepared in the 1980s prior to the adoption and implementation of NI 43-101. The Noranda report does not detail cut-off grades and metal prices used to estimate the historical mineralization, and used a tonnage factor of 11 cubic feet per ton. A qualified person has not done sufficient work to classify the historical estimates as current mineral resources, and the company is not treating the historical estimates as current mineral resources. More work, including, but not limited to, drilling, will be required to conform the estimates to current CIM definition standards. Investors are cautioned that the historical estimates do not mean or imply that economic deposits exist on the property. The company has not undertaken any independent investigation of the historical estimates or other information contained in this press release, nor has it independently analyzed the results of the previous exploration work in order to verify the accuracy of the information. The company believes that the historical estimates and other information contained in this press release are relevant to continuing exploration on the property.
Management of the company is relying on the historical estimates contained in the Noranda report because the authors were experts and used industry-standard procedures at the time. The historical estimates are relevant to the company's planned exploration program because they identify significant mineralization that will be the target of this exploration program.