As per the terms of the deal, ESI will finance, build and operate a cobalt processing facility, which will receive feedstock material mined by BMR from its cobalt properties in Ontario.

ESI said that a five-member technical committee will be established to oversee a planned feasibility study for mining operations. The committee will also make a recommendation on whether to proceed with the project.

Initially, BMR will have 35% stake in the processing facility and related assets once ESI achieves a one-time capital return. A further 40% interest will be earned by BMR once ESI achieves a two-times return of capital, the firm said.

Once BMR earns 75% interest, the two parties will launch a joint venture which will be responsible for purchasing feedstock material from BMR, operating the process facility and marketing cobalt concentrate.

ESI said in a statement: “BMR would have a right of first refusal to purchase ESI’s interest if ESI wishes to sell to a third party and an option to purchase ESI’s remaining 25% interest after the joint venture is formed.  The Agreement contains various default and termination events.”

For the construction of the processing facility, ESI plans to raise up to C$90m.

The planning, construction and operation of mining and processing activities under the agreement is subject to various regulatory approvals and requirements.

ESI said: “BMR would have a right of first refusal to purchase ESI’s interest if ESI wishes to sell to a third party and an option to purchase ESI’s remaining 25% interest after the joint venture is formed.

“The Agreement contains various default and termination events. Certain events (failure to raise required financing, commence design and procurement activities or advance construction by determined dates) would entitle BMR to terminate the Agreement and receive a CAD $20 million fee.”

Pipeline equipment rental and sales company, ESI Energy Services has principal operations in Leduc, Alberta, Canada and Phoenix, Arizona, US.

BMR is a privately owned Australian multi-commodity battery materials exploration company.