Cobalt Blue (ASX:COB) is a world-class cobalt "pure play", focussed on the Thackaringa project in New South Wales.
Following an extensive drilling program, we are joined Joe Kaderavek, chief executive officer, in Proactive Q&A Sessions™.
PROACTIVE INVESTORS: Welcome Joe.
Cobalt Blue recently announced a significant resource upgrade to its Thackaringa Cobalt Project. What are the highlights?
Joe Kaderavek: The upgrade is a key milestone for Cobalt Blue.
In the last 6 months, the company has raised A$10 million, listed on the ASX, converted its historic resource to a JORC 2012 standard, managed an 8,000 metre drilling campaign, and has now delivered a 55 million tonne Inferred Resource (+66% vs previous estimates) at a higher grade of 910ppm (+9%), in conjunction with identifying another 26 million tonnes of exploration targets.
Additionally, we have declared a maiden 6 million tonne Indicated Resource. In the process, our contained cobalt has almost doubled, to 50,000 tonnes.
Looking forward, we will focus upon conversion of exploration targets into resource, and in four weeks, we will be delivering a Scoping Study.
Beyond that, we will be producing a Preliminary Feasibility Study (PFS) by mid-2018, and the key target date for investors remains a Bankable Feasibility Study by mid-2019.
With only a fraction of the lease area being explored, how can you be certain that COB is focussed upon the right ground?
Joe Kaderavek: Historically, the only area based geophysical work performed was a limited Induced Polarity (IP) study, focussed on the three known deposits, which are essentially ridgelines of exposed resource.
However, it’s appropriate to consider the overall footprint of cobalt bearing pyrite on our leases, to determine sooner rather than later, whether further high grade mineralisation exists.
The board is currently seeking further technical advice on how such a program, possibly an aerial geophysical survey, would be structured and how it would fit into our corporate objectives.
I’m looking forward to updating the market about this.
Aside from the upgrading of the Thackaringa resource, what can investors look forward to over the next year?
Joe Kaderavek: Work performed to date has primarily focussed upon resource quantity/quality and (as part of the scoping study) initial work on sorting/processing feasibility.
As we progress towards a PFS, and confidence surrounding the processing economics builds, Cobalt Blue will begin to define the operating margin.
The margin will drive Free Cash Flow and allow the market to value the Thackaringa project in due course.
That’s exciting for shareholders, starting with a world scale resource today, then defining a strong operating margin tomorrow.
Why is the global cobalt market supply at risk?
Joe Kaderavek: Examine this through two filters. Firstly, the Democratic Republic of Congo (DRC) represents 55% of supply, and that is subject to significant sovereign and/or ethical risk (unsafe/exploitive artisanal level mining).
Secondly, 98% of cobalt is sourced as a by-product from nickel or copper mining.
Excluding the new supply from the DRC, global copper and nickel mine growth is largely “cobalt less”, with low cost Indonesian and Philippine nickel pig iron and South American copper molybdenum ores not adding to cobalt supply, whilst depressing nickel and copper pricing for new mines that do have cobalt content.
As a result, increasing dependency on DRC cobalt is a concern for the industry. The Thackaringa deposit, not dependent on nickel or copper pricing, is very well placed.
PROACTIVE INVESTORS: We appreciate you updating investors in Proactive Q&A Sessions™.
Joe Kaderavek: Thanks. I look forward to updating the market further after our Scoping Study is delivered.