Fledgling gold explorer Cove Resources is heading off in a new direction with the aim of producing titanium pigment in Europe within three years.
Cove, which went into a trading halt last Thursday, is expected to tomorrow reveal an $11 million cash and scrip deal to buy an advanced-stage titanium project in Finland from a UAE-based investment company.
The agreement is believed to cover the Koivu project, 60km south-east of the Finnish port city of Kokkola in the country’s west.
Koivu contains nearly 70 million tonnes of JORC-classified resources in the indicated and inferred categories grading better than 7 per cent titanium dioxide, which is widely used in the paint and plastics industries.
Initial studies support the case for a 20-year mine producing 250,000 tonnes a year of titanium pigment for European markets, with the project economics potentially enhanced by magnetite and phosphorus by-products.
It is believed Cove has already held talks with port authorities in Kokkola and potential off take partners as part of its due diligence process. The deal represents the second transformational shake-up of a company which only listed on the Australian Securities Exchange 18 months ago via a $4.5 million exploration float focused on WA’s Eastern Goldfields.
Little more than 10 months later, however, the company added base metals and iron ore exploration interests in the Pilbara via a scrip-based purchase of the privately-owned Blenheim Resources.
Blenheim’s principals, Grant Freeman and Garry Hemming, emerged from the tie-up with a swag of options and performance options in Cove as well as management control, Freeman becoming a non executive director and Hemming the managing director.
Cove held just $2.5 million at its last report for the end of March, suggesting it may have to go back to market to raise the $3 million-plus cash component for Koivu, though the payment may well be staggered over a couple of years.
The company has found little share price joy in gold, having bounced out of the blocks after its float to a high of 32¢.
The stock last traded above its issue price of 20¢ nearly a year ago and, at its last trade of 10¢, is skirting with record lows.