Phoenix Copper Limited / Ticker: PXC / Sector: Mining 

24 May 2021

Phoenix Copper Limited

("Phoenix" or the "Company")

Earn-in Agreement with First Cobalt Idaho on the Redcastle Cobalt Property

Phoenix Copper Ltd (AIM: PXC, OTCQX: PXCLF), the AIM quoted USA focused base and precious metals emerging producer and exploration company, is pleased to announce that it has entered into an earn-in agreement (the "Agreement") with First Cobalt Idaho, the wholly owned subsidiary of Toronto-based First Cobalt Corporation (TSX.V: FCC, OTCQX: FTSSF), in respect of the Company's Redcastle cobalt property on the Idaho Cobalt Belt. The Company's cobalt holdings can be viewed on the Phoenix website at  https://phoenixcopperlimited.com.

Overview of the Agreement

·      In consideration of signing the Agreement, First Cobalt will pay US$50,000 and issue 200,000 unrestricted shares to Phoenix.

·      First Cobalt can earn a 51% interest in Borah Resources Inc, the Company's 100% owned subsidiary and owner of the Redcastle property, by spending no less than US$1,500,000 in exploration and related work on Redcastle over an initial three year period, and by paying a further US$100,000 to Phoenix on the third anniversary of the Agreement ("Phase 1").

·      Subject to the completion of Phase 1, First Cobalt may earn an additional 24% interest in Borah Resources, for a total interest of 75%, by spending no less than a further US$1,500,000 in exploration and related work on Redcastle over a further two year period, and by paying a further US$150,000 to Phoenix in cash or the equivalent in unrestricted First Cobalt shares, at Phoenix's option, on the fifth anniversary of the Agreement, and by providing Phoenix with a NI 43-101 compliant Preliminary Economic Assessment ("PEA") for the Redcastle property ("Phase 2").

·      Upon completion of Phase 1 and Phase 2, Phoenix and First Cobalt will enter into a joint venture agreement (the "JV"), with First Cobalt as managers, and will share in the capital expenditures for the ongoing development of Redcastle in accordance with their respective ownership interests (First Cobalt 75%, Phoenix 25%).  If either party does not contribute pro-rata to its ownership interest, that interest will be diluted accordingly. Should Phoenix's interest in the JV be reduced to 10% or less, a 2.5% royalty shall become payable to Phoenix. This royalty can be acquired by First Cobalt for US$500,000 per each 0.5%.

·      The Company's Bighorn cobalt property on the Idaho Cobalt Belt does not form part of the Agreement and is being transferred from Borah Resources Inc into Salmon Canyon Resources Inc, a wholly owned subsidiary of the Company.

Ryan McDermott, Chief Executive Officer, commented:

"Our Redcastle property is located in Lemhi County in the southern half of the Idaho Cobalt Belt approximately 110 miles north of the Empire Mine. The property shares a common border with First Cobalt's Iron Creek property and consists of 600-acres of unpatented mining claims. The Iron Creek Mine currently hosts indicated cobalt and copper resources of 2.37 million tonnes, grading 0.32% cobalt and 0.61% copper. Additional inferred cobalt and copper resources have been estimated at 2.95 million tonnes at 0.28% cobalt and 0.68% copper. We are delighted to be partnering the development of Redcastle with First Cobalt, a TSX quoted company with a market capitalisation of approximately C$168 million.

"First Cobalt has been drilling from surface and underground workings at Iron Creek since 2018.  They are well-positioned to carry out exploration at our Redcastle property adjacent to Iron Creek with the expertise, staffing, and infrastructure already in place locally. This Agreement will enable development of the Redcastle property to progress, at no cost to Phoenix, while we concentrate our efforts on our flagship Empire Mine in Custer County.   

"The capital cost savings to Phoenix are likely to be considerable, given that the Redcastle ore will be mined and processed as an extension to First Cobalt's Iron Creek mine. In addition to this local infrastructure, First Cobalt also owns the only cobalt refinery in North America, located in Ontario, Canada. This refinery will receive cobalt from the Idaho operations, saving Phoenix additional costs which would be incurred in developing or sourcing refining capacity. The refinery will employ a low carbon footprint hydrometallurgical process and will provide battery grade refined cobalt sulfate suitable for the electric vehicle market. Both Phoenix and First Cobalt recognise the potential future synergies as we work together on the Idaho Cobalt Belt, whilst at the same time enabling us to focus on our base and precious metals projects at Empire.

"This Agreement, as well as the progress currently being made at our Empire Mine, is supported by a strong macroeconomic environment for the materials required for sustainable energy transition. The U.S. Administration has proposed an infrastructure bill that supports the domestic production of base metals, such as cobalt and copper, both required for global electrification and clean energy initiatives.

"Our 580-acre Bighorn cobalt property, located approximately 25 miles north of Redcastle in the northern half of the Idaho Cobalt Belt, is not included in this current agreement with First Cobalt as it is situated outside of the immediate Iron Creek area.

"I look forward to working with the First Cobalt team in the development of Idaho-based cobalt and copper resources from the Idaho Cobalt Belt."

Trent Mell, First Cobalt Chief Executive Officer, commented:

"We are pleased to enter into this earn-in agreement with Phoenix Copper on the Redcastle property. The property is directly adjacent to our Iron Creek Project and lies just 750 metres east of our Ruby Zone cobalt-copper prospect, which is exposed at surface. The host rock sequence to the sulfide mineralization is interpreted to extend to the Redcastle property, so we believe the prospectivity of this area is quite high. Phoenix's experience of working in Idaho on their own copper projects should help us advance our programme quickly."

Redcastle and Iron Creek Cobalt - Lemhi County, Idaho

The Redcastle property is located in the southern half of the Idaho Cobalt Belt in Lemhi County approximately 110 miles north of the Empire Mine.  The property consists of 600-acres of unpatented mining claims situated due east, and sharing a common border with, First Cobalt's Iron Creek Cobalt Project.  

The Iron Creek Cobalt Project is located along the most prolific trend of cobalt mineralization in the USA that includes the historic Blackbird Mine. Iron Creek consists of 1,698 acres of patented and unpatented mining claims.  It was first discovered in 1946 and extensively explored in the early 1970s.  First Cobalt has completed over 29,000 metres of diamond drilling and published a NI 43-101 compliant resource estimate in 2019.  Significant infrastructure is in place to support multiple drills and surface and underground activity for future work.  Historic underground development includes 600 metres of drifting from three adits and an all-weather road connecting the project to Idaho State Highway 93.  Further information can be found at https://www.firstcobalt.com.

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Contacts

For further information please visit https://phoenixcopperlimited.com or contact:

Notes

Phoenix Copper Limited is a USA focused, base and precious metal emerging producer and exploration company, which has carried out a drilling programme and generated a copper, gold, silver and zinc resource on which it is carrying out a feasibility study to bring the historically producing Empire Mine in Idaho, USA, back into production. It is also evaluating the silver and gold resources around three other past producing mines within the 27.8 km²  Empire claims block as well as cobalt in two claims blocks north of Empire in Idaho.

Phoenix's primary operations are focused near Mackay, Idaho in the Alder Creek mining district. This district includes the historical Empire, Horseshoe, White Knob and Blue Bird Mines, past producers of copper, gold, silver, zinc, lead and tungsten from underground mines in the first half of the twentieth century. Additionally, the district includes Navarre Creek, a Carlin-trend gold discovery which hosts a 6.1 km gold strike length within a 9.8 km² area.

Phoenix acquired an 80% interest in the historical Empire Mine property in 2017 and, based on a total of 320 drill holes, an oxide resource was completed in late 2017. A NI 43-101 compliant PEA (preliminary economic assessment) for an open pit heap leach solvent extraction and electrowinning ("SX-EW") mine was completed in April 2018. In 2018 a further 8,600 metres in 93 holes was completed to upgrade the oxide resources, provide samples for ongoing metallurgical test work, geotechnical and hydrological studies and condemnation drilling for the heap leach pad site, waste dump and plant site. An updated NI 43-101 compliant resource was completed in early May 2020 and October 2020 for all metals. Present contained metal in all NI 43-101 compliant categories of resources, measured, indicated and inferred, stand at 355,523 ounces of gold, 129,641 tonnes of copper, 10,133,772 ounces of silver and 58,440 tonnes of zinc. Following the latest NI 43-101 compliant resource, Phoenix updated its economic model in February 2021 to include the processing of all contained metals through a two phased approach.

Since acquiring the Empire project, Phoenix has increased the claim area from 818 acres to 5,717 acres, mainly to the northwest and west, and in so doing has increased the potential for additional oxide and sulphide copper resources, as well as the potential for stand-alone gold and silver resources, along a strike length of approximately 5.4 km towards the other brownfield mines of the Horseshoe, White Knob and Blue Bird Mines now within the property boundary. In particular, a new discovery at Red Star, 330 metres north west of the Empire Mine proposed open pit, has revealed sulphide ore and from three shallow exploration drill holes a NI 43-101 compliant maiden resource of 1.6 million silver equivalent ounces was reported.

At Empire, it is estimated that less than 1% of the potential ore system has been explored to date and, accordingly, there is significant opportunity to increase the resource through phased exploration.

More details on the Company, its assets and its objectives can be found on PXC's website at  https://phoenixcopperlimited.com