Cadence Minerals Plc (LON:KDNC) took a major step closer to becoming a significant player in the world’s burgeoning cobalt market on 3 July, when it elected to acquire an initial 10% direct interest in the Leogang project in Austria in an all-share deal.
The acquisition follows the signing of a memorandum of understanding last month with the Australian owner of Leogang, Clancy Exploration Limited (ASX:CLY).
Cadence’s chief executive Kiran Morzaria sets the company’s move into cobalt in the context of the number of new electric vehicles that are likely to flood onto global markets in the coming decades, all requiring cobalt for their batteries.
But Leogang ticks other boxes for the company too.
“The question we always ask is: is the deposit of a high enough grade that your cost of production is in the lowest cost quartile?” says Morzaria.
“And with the sorts of grades we see at Leogang, we think it is.”
Historic rock chip samples showed grades as high as 15.76% cobalt, with 8.12% nickel and 4.91% copper.
“It’s early stages,” continues Morzaria, “but it’s potentially high grade and it’s strategic.”
It’s also not far away from one of Cadence’s other major investments, the Cinovec lithium project in the Czech Republic.
Both are described by Morzaria as “strategic,” by which he means, they are located at the heart of Europe.
Because as the world’s single largest trading bloc, it’s highly likely Europe will develop its regional car battery-making hub, and if it does, Germany, just across the borders from Austria and the Czech Republic, will be central to that effort.
And Cadence’s move to a 10% interest in Leogang is likely to be just the beginning. The company also has an exclusive option to acquire a further 10% for A$1 mln payable in either cash or shares.
At this point, Morzaria is sounding upbeat about that prospect.
“The next six months is going to be a really busy time of exploring and really pushing this forward,” says Morzaria. “We’ll be working with Clancy on developing an exploration programme, building up an understanding of the geology, doing sampling and if appropriate, geophysics.”
The ground covers a total of 80 square kilometres in the prospective dolomite belt in western Austria. Two historical mines on the property show significant cobalt readings: Leogang and the Nockelberg mine.
Many of these samples compare favourably with the world’s well-established cobalt producers.
In the Democratic Republic of Congo, for example, a major source of world supply, cobalt is mined typically at grades of between 0.1% and 0.4%, with a copper credit.
And over in the USA, one of the world’s leading cobalt development projects, the eCobalt mine in Idaho has a measured and indicated resource running at grades of around 0.5% cobalt and 0.7% copper, with a gold credit.
Several samples from Nockelburg show grades running at higher than 2% cobalt, with additional nickel and copper credits.
However, no modern exploration has been completed to date, so really it’s all up for grabs.
“I’m excited about it because of its strategic location and because of these grades,” says Morzaria.
It will be interesting to watch as the project progresses.