On November 21, 2017, Nevada announced a letter agreement to acquire a 100% interest in the Lovelock Cobalt Mine (the “Lovelock Mine”) located in Churchill County, approximately 100 miles (150 kilometres) east of Reno, Nevada.
The Lovelock Mine property consists of 35 unpatented claims in the Cottonwood Canyon area of the Stillwater range totaling approximately 700 acres (283 hectares). It was discovered by George Lovelock and Charles Bell about 1880.
Lovelock Cobalt Mine Property
According to U.S. Government annual reports, the Lovelock Mine saw limited production of nickel, copper and cobalt beginning in 1883. The primary cobalt mineral was identified as “cobaltite”, a compound of cobalt, nickel and arsenic. Records of a geochemical analysis from that era indicate that the average composition of the cobaltite contained 17.30% cobalt and 13.62% nickel.
Entrance to Main Shaft
The mine operated from 1883 to 1890 to the 100 foot level, reporting 500 tons of cobalt and nickel mineralized material shipped to England for processing. After intermittent production, an English company attempted smelting on site in 1898 but little or no production was made (Source: “Mineral Resources of the United States for 1885”, 1886). No further production from the Lovelock Mine is known for well over a century.
Lovelock Mine – Hand-Dug Tunnel
“Mineral Resources of the United States for 1885” – Cobalt
Geology and Mineralization of the Lovelock Mine
The rocks of the Lovelock Mine area include highly altered sedimentary and volcanic rocks cut by a larger mass of diorite and by aplitic dikes, all of which are now highly altered. The altered volcanic rocks lie in a syncline bordered on the west, north and east by the altered sedimentary rocks. Probable faults, inferred from the nature of the contacts, form the boundaries between the sedimentary and volcanic rocks northwest of the Lovelock Mine.
The cobalt and nickel minerals of the Lovelock Mine and the nearby Nickel Mine occur in stringers that cut the rock immediately surrounding the diorite. In the case of the Lovelock Mine, the stringers cut a highly-altered greenstone. The minerals recognized are tetrahedrite, erythrite (cobalt bloom), azurite, and green crusts that contain copper and nickel arsenates and sulphates. Other sources reported the principal mineral present is cobaltite.
Wall Rock at Nearby Adit
It was postulated by historical observers that there has been post-mineral faulting with downthrow on the west, and that the extension of the productive zone is west of the Lovelock Mine shaft and at greater depth than the historical workings could reach (Source: “Nickel Deposits in Cottonwood Canyon, Churchilll County, Nevada”, H.G. Ferguson, 1939).
“Nickel Deposits in Cottonwood Canyon, Churchilll County, Nevada”, H.G. Ferguson, 1939
Lovelock Cobalt Mine Looking South
Terms of the Letter Agreement
Nevada Sunrise intends to execute a definitive agreement (the “Agreement”) within 30 days of the effective date of the letter agreement, which was signed on November 11, 2017. The Agreement will provide for the Company to earn a 100% interest in the Property in consideration for cash payments and common shares payments to an underlying vendor (the “Vendor”) payable over 3 years from the signing of a definitive agreement, subject to a 2.0% net smelter returns royalty (“NSR”), as follows:
- A non-refundable $3,000 cash payment to be paid by Nevada Sunrise as a deposit for an exclusive 45-day period during which the Company will conduct due diligence on the Property;
- On the later of TSX Venture Exchange (“TSXV”) approval and signing of the Agreement: $15,000 in cash and 200,000 common shares of the Company;
- 1st Anniversary: $20,000 in cash and 200,000 common shares of the Company;
- 2nd Anniversary: $25,000 in cash and 250,000 common shares of the Company;
- 3rd Anniversary: $30,000 in cash and 300,000 common shares of the Company.
Closing of the acquisition is subject to completion of due diligence review of the Property, including a site visit to the sole satisfaction of Nevada Sunrise, and acceptance of the Agreement by the TSXV. Nevada Sunrise will have the right to accelerate the timing of cash payments to the Vendor at its discretion. On or before the 10th anniversary of the execution of the Agreement, Nevada Sunrise shall have the right to purchase 50% of the NSR (i.e. 1% NSR interest) for US$1,000,000. An area of interest applies to the current boundaries of the Property.
John R. Kerr, P. Eng., is the Company’s designated Qualified Person within the meaning of National Instrument 43-101 and has reviewed and approved the technical information contained herein. Readers are cautioned that the technical information described in this disclosure is historical in nature; however, the information is deemed credible and was produced by professional geologists of the eras discussed.