Broken Hill Prospecting Ltd (ASX:BPL) and Cobalt Blue Holdings Ltd (ASX:COB) have entered an international strategic partnership for their cobalt project near Broken Hill in New South Wales.
The Thackaringa Cobalt Project Joint Venture partners will be working with LG International (LGI), the resources investment arm of LG Corp (KRX:003550).
Under the new partnership, LGI will provide capital and technical assistance for the joint venture to make a high-purity battery-grade cobalt sulphate.
LGI will work with EV battery maker
To achieve this, LGI will cooperate with LG Chem, the world’s fourth-largest electric vehicle (EV) battery maker.
LG Chem has strong technical leadership in the development of next-generation batteries, in particular for fixed storage and EVs.
Shares were up 30% in late trading to 13 cents and have more than doubled since early March.
“Major win for Thackaringa”
Broken Hill Prospecting managing director Trangie Johnston said: “The strategic alliance with LGI is a major win for the Thackaringa Cobalt Project and our board welcomes LGI’s partnership.
“The LG Group brings valuable expertise in product development and other disciplines to the joint venture and is a significant milestone along the road to developing this world-class cobalt resource.”
Cobalt Blue has executed a binding term sheet with LGI to raise US$6 million at A$1.10 per share by Monday, April 16, 2018.
READ: Broken Hill Prospecting readies aggressive growth and value-adding strategy in 2018
LG International executes resources investment strategy for the LG Group and has extended its focus to include the raw materials of lithium-ion battery construction such as cobalt, nickel and lithium.
It operates in close cooperation with LG Chem to secure these ‘green minerals’ for the LG Group.
“Commercial interest advanced”
"BPL’s commercial interest in the Thackaringa project is significantly advanced by the involvement of LGI,” Johnston said.
“We look forward to working with both partners to deliver the project as expeditiously as possible.”
BPL completed a spin-off of Cobalt Blue in February 2017, with investors seeking shares and options exceeding the $10 million maximum being offered.
Realising value from cobalt project
Johnston said the IPO was an important initiative for the company to realise significant value from its then wholly-owned Thackaringa Cobalt Project.
Shareholders received 35 million COB shares, equivalent to 37% of the new entity, the value of which is now about $50 million based on COB’s current share price.
BPL holds legal title to the Thackaringa leases under the joint venture and COB can earn up to 100% of the cobalt project if it completes a four-stage farm-in.
It must commit $10.9 million in project expenditure before June 30, 2020, and pay BPL $7.5 million in cash.
BPL will be entitled to receive a 2% net smelter royalty on all cobalt produced from the tenements.
Subject to COB completing stage I milestones, COB has a 51% beneficial interest in the cobalt project with BPL retaining a 49% beneficial interest.
READ: Cobalt Blue delivers resource upgrade at Thackaringa Project, paving the way for 70% stage II earn in
For COB to retain 51%, key deliverables by April 1, 2018, are a 40 million tonne indicated resource sufficient to support a prefeasibility study (PFS) to JORC 2012 standard and certain expenditure obligations.
This week COB delivered a resource of 72 million tonnes at 852 parts per million cobalt, 9.3% sulphur and 10% iron for 61,000 tonnes of contained cobalt, 72% of which is in the indicated category.
A draft geological report has been submitted to BPL, serving notice that COB believes it has fulfilled its stage I requirements.
The PFS is due by June 30, 2018, which forms part of stage II milestones for COB to earn up to a 70% beneficial interest.