Capella announced on October 31, 2022, that it had acquired a 100% interest in a portfolio of lithium (lithium-cesium-tantalum, or “LCT”) and rare-earth element (“REE”) pegmatite reservations in central Finland through the acquisition of elementX Finland Oy (Figure 1). The portfolio currently consists of five reservations covering a total area of 2,300 square kilometres and which are predominantly focused on spodumene-bearing pegmatite complexes within the Järvi-Pohjanmaa and Seinäjoki lithium-permissive tracts as defined by the Geological Survey of Finland (“GTK”).
Four of the reservations (Nabba, Lappajärvi W and E, and Kaatiala) lie immediately adjacent to, and to the S of, Keliber Oy’s spodumene mine development project in the Kaustinen district (Figure 2). Given both the size of the target areas and the lack of modern systematic exploration to date, Capella announced on March 20, 2023, the signing of a Definitive Agreement with Hilo Mining Ltd (now European Energy Metals Corp. or “EEM”)(TSX.V: FIN) through which Capella and EEM would together advance the Central Finland Lithium-REE portfolio. The agreement with EEM (see further details below) will ensure adequate funding for advancing the priority spodumene pegmatite targets to drill-ready status. EEM refers to this project as its “Finland Project”:
Figure 1. Location of the Central Finland Li-REE project.
Figure 2. Locations of Capella’s project areas in the Järvi-Pohjanmaa lithium tract, which lies between the Keliber and Seinäjoki lithium mining districts.
European Commission Critical Raw Minerals Act
On March 16, 2023, the European Commission ratified the European Critical Raw Minerals Act (“ECRM”), which has been designed to support the development of a resilient European supply chain of both lithium and REE’s. The ECRM includes the setting of benchmarks by 2030 for domestic capacities in the fields of critical metal extraction, processing, and recycling. The European Commission’s March 16, 2023, News Release relating to the implementation of the Critical Raw Minerals Act may be found at:
Capella’s enhanced Li-REE portfolio in Finland will provide the Company with a the potential to become one of the EU’s major sources of these commodities.
In parallel, the Norwegian government has also thrown support behind the construction of a lithium-ion battery plant in the northern city of Mo I Rana. This gigafactory, which is currently expected to enter in to operation in 2025, is part of a broader governmental strategy to take advantage of the abundance of low-cost renewable (hydroelectric) energy in-country and become a major contributor to future lithium battery production.
Expected 2023 Work Program
Capella’s work to date has focused on the compilation of available geological data from the Finnish Geological Survey (“GTK”), including Bottom of Till (“BoT”) data from the northernmost Nabba reservation and outcrop occurrence databases (including descriptions of pegmatite complexes) in the Lappajärvi W reservation.
EEM announced on June 6, 2023, the engagement of Resourceful Geoscience to undertake systematic exploration over the Central Finland properties during the northern summer. The primary goal of this work will be to rank target areas and bring them to drill-ready status.
Terms of the Capella-European Energy Metals Corp. (“EEM”; formerly Hilo Mining) Agreement
European Energy Metals Corp. will be required to complete exploration expenditures totaling CAD 2.5M and staged cash and share payments to Capella over a 4 year period in order to earn-in to an 80% interest in the Central Finland Lithium-REE project. Specific terms of the agreement are indicated below:
- EEM has the option to earn a 51% interest in the Central Finland portfolio (the "Initial Option")(the “Property”) by (i) making a cash payment of $100,000 and issuing 100,000 common shares to Capella upon receiving TSX Venture Exchange approval of the Earn-In Agreement; (ii) completing $500,000 in expenditures on the Property and issuing 150,000 common shares to Capella on or before the first anniversary of the Earn-In Agreement; and (iii) completing an additional $500,000 in expenditures on the Property, paying $100,000 in cash and issuing 250,000 common shares to Capella on or before the second anniversary of the Earn-In Agreement. Upon exercise of the Initial Option, Hilo will become the operator of the Property.
- Following exercise of the Initial Option, Hilo will have a further option to earn an additional 29% interest in the Property (the "Final Option") by (i) completing $500,000 in expenditures on the Property, paying $150,000 in cash and issuing 750,000 common shares to Capella on or before the third anniversary of the Earn-In Agreement; and (ii) completing $1,000,000 in expenditures on the Property, paying $150,000 in cash and issuing 750,000 common shares to Capella on or before the fourth anniversary of the Earn-In Agreement.
- If, on the date of the exercise of the Final Option, the Property hosts a mineral resource equal or greater than 10 million metric tons with a minimum average grade of 1.0% Lithium Oxide (Li2O) the Company will make a bonus cash payment of $500,000 and issue 1,000,000 common shares to Capella.
- The parties have the option to form a joint venture upon exercise of the Initial Option or to defer the joint venture formation until the exercise of the Final Option.