The European Cobalt Ltd (ASX: EUC) share price rocketed out a trading halt this morning in response to a potential acquisition. After flying by as much as 75% in morning trade, European Cobalt shares are sitting 45% higher at the time of writing at 2.9 cents per share.
It's important to note that European Cobalt is very much at the smaller end of the ASX with a current market capitalisation of $22 million. The company is an ASX resources share that, as its name suggests, focuses on cobalt opportunities in Europe.
Its current projects include the Dobsina (Co-Ni-Cu) and Kolba (Co-Cu-Ni) mines in Slovakia, and the Jouhineva (Co-Cu-Au-Ag) mine in Finland.
Why the European Cobalt share price is rocketing
This morning, European Cobalt announced it has secured an exclusive option to acquire the Edleston Gold Project in Ontario, Canada.
The project covers an area of 64.33 square kilometres and is located within the Cadillac-Larder Lake fault zone which has produced around 75 million ounces of gold.
More than CDN$10 million has been spent to date on geophysics and drilling across the Edleston Project by 55 North Mining Inc.
As a result, extensive mineralisation has already been established at the site, with 156 diamond drill holes over 46,000 metres of drilling completed.
High-grade intercepts from this previous drilling include 5.3 metres at 81.39 grams per tonne (g/t) gold from 110 metres and 3.3 metres at 57.4 g/t gold from 207.4 metres.
European Cobalt managing director Rob Jewson believes the project is an advanced exploration opportunity, commenting:
"The work done to date has outlined a significant mineralised system which can be effectively targeted using IP geophysics. To date, only 540m of strike has been tested along a corridor with multiple moderate to strong IP conductors delineated along a total strike exceeding 3,300m."
Non-executive technical director Dale Ginn has prior involvement in the discovery of Edleston and said:
"The mapping and aeromagnetic interpretation we completed previously on the Project has shown that there is up to 10km of strike prospective lithologies which are yet to be tested in addition to the priority IP targets already defined."
Commercial terms of the agreement
European Cobalt signed an agreement with vendor 55 North Mining for a 30-day exclusive option period for a non-refundable option fee of CDN$100,000.
If European Cobalt decides to exercise the option, it will acquire 100% of the Edleston Project by providing consideration of CDN$650,000 cash and 100 million shares.
The proposed transaction remains subject to technical and legal due diligence to be undertaken by European Cobalt.
