Cobalt Blue Holdings (ASX:COB) was at the forefront of investors’ minds recently as the company's successful IPO received bids for the $10 million maximum allowed at the $0.20 issue price.
The company has been trading on the ASX for the past two weeks, and the last share price of $0.225 provides a comfortable premium to the offer price.
Cobalt Blue’s flagship Thackaringa Cobalt Project is strategically located 23 kilometres south-west of the world class mining centre of Broken Hill within New South Wales.
We welcome back to Proactive Q&A Sessions™ chief executive officer Joe Kaderavek.
PROACTIVE INVESTORS: Welcome Joe.
With the company’s new cash war chest, can you outline for investors the plan to advance Thackaringa?
Cobalt Blue represents the only non-polymetallic pure play ASX-listed cobalt company, and the Thackaringa deposit is of very few globally.
Our focus is upon cobalt and associated sulphur contained within a very clean orebody.
Our immediate goal is to triple the size of the current resource, and prove that Thackaringa will support a significant, long life mining operation.
We have recently completed 1,483 metres of drilling and plan to have three drill rigs in operation by end of February.
In conjunction with this substantial work, we will be delivering a series of feasibility studies and associated project approvals.
- Scoping Study 2017;
- Preliminary Feasibility Study 2018; and
- Bankable Feasibility Study 2019.
How does having sulphur as a by-product change the marketing and economics of the project?
Sulphur is used largely in the production of sulphuric acid.
Australia imports over four million tonnes of sulphuric acid (equivalent) per annum, mostly for fertiliser production.
Thackaringa, even at full scale, would supply a fraction of that market.
Firstly, sulphuric acid is a large, stable market driven by long dated offtake agreements, with customers wishing to avoid variable overseas supply and currency fluctuations.
Secondly, this additional cashflow will contribute significantly towards costs, providing shareholders with strong leverage to the cobalt price.
Touching on the location of Thackaringa near Broken Hill, is the company able to leverage off existing infrastructure and labour?
Broken Hill, with its existing people and skillsets, backed by strong government support, is a tremendous asset for the project.
As a result, the site will also have access to mains power and water – providing sound cost advantages.
The main Barrier Highway, passing within 4 kilometres of site, will allow our Broken Hill employees a 20 minute commute to/from work.
The Spencer Gulf railway line, passing through the site, will support low cost freight for our product to international and domestic markets.
Moving to the cobalt market, can you provide an update on where the price currently sits and share your market forecasts?
The cobalt market is undergoing an extended period of tightness as lithium ion batteries and superalloys drive demand.
Spot pricing is ~US$20/lb, (+100% yoy).
Demand growth will average 8% over the next decade, balanced against supply of 4%.
That’s a significant, long dated structural deficit, perfect for Cobalt Blue.
Why should investors consider adding Cobalt Blue to their portfolio?
Cobalt Blue is a unique investment:
- A world scale deposit capable of sustaining a global top 10, long life mine.
- A low cost base strongly supported by proximity to Broken Hill with significant ore processing directly on site. Put simply, how many world class prospects are located next to an established city and railway line?
- Thackaringa is a pure play cobalt orebody providing strong leverage to the rising cobalt price. 98% of cobalt producers and explorers are nickel or copper deposits with cobalt credits, delivering far lower exposure.
- Thackaringa is a sustainable, large scale, near surface deposit with an exceptionally clean ore.
Upcoming catalysts included significant drilling program in conjunction with metallurgical and engineering studies over 1H 2017.
PROACTIVE INVESTORS: Thank-you Joe.