UraniumSA Ltd (ASX:USA) is acquiring six highly-prospective cobalt-copper-nickel assets in New South Wales, the Northern Territory and Western Australia.
The company has entered into an agreement to acquire 100% of the issued capital of Nomad Explorations Pty Ltd, the owner of the projects.
UraniumSA is acquiring the projects at a time when global technology groups are aiming to source non-conflict cobalt and the cobalt price remains above US$85,000 per tonne.
Shares surged 145% in early trade to 1.7 cents on strong volume.
Projects in established mining regions
All the new projects are in established mining regions which ensures significant supporting infrastructure.
UraniumSA non-executive chairman Alice McCleary said: “Taking a systematic and strategic approach, the board is delighted with the proposed acquisition of six-highly prospective cobalt assets in NSW, NT and WA.
“Notably, the NSW projects are close to Broken Hill which is emerging as a potential cobalt supply chain hub for global technology groups.
“Similarly, the NT and WA assets are in regions with evidence of demonstrable cobalt mineralisation,” she said.
NSW projects: Perseus & Midas
The NSW projects, Perseus and Midas, are in the Broken Hill region, an emerging potential global cobalt supply chain hub.
The Perseus project is 20 kilometres west of Broken Hill, close to Cobalt Blue’s (ASX:COB) high-profile Thackaringa project.
The Midas project, which is 40 kilometres northeast of Broken Hill, remains under-explored historically.
However, Silver City Minerals (ASX:SCI), which owns contiguous ground to the west discovered a folded cobalt-copper belt over 25 kilometres strike which delivers exploration upside to the Midas project.
Highly-prospective NT projects
Two of Nomad’s Northern Territory projects, Pungalina and Pear Tree, are contiguous with Northern Cobalt’s (ASX:N27) tenure, while Calvert is slightly south.
The tenure area is highly prospective as a known regional faulting, which controls cobalt mineralisation, is trending from N27 ground into Nomad’s ground.
Further, initial geological interpretations have already identified multiple drill targets within Nomad’s project areas.
Under-explored WA project: Rover
The Rover project, 140 kilometres west of Leonora, is in a region well-known for nickel-copper mineralisation, but cobalt to a much lesser extent due to lack of exploration.
However, several significant discoveries that highlight the upside have been recently made, including 1.9 metres at 0.23% cobalt by St George Mining (ASX:SGQ).
Capital raising
As part of the Nomad acquisition strategy, UraniumSA is raising about $1.2 million by way of a two-tranche placement.
The company will use the funds to explore its own tenements, the new Nomad tenements and for working capital.
In consideration for the Nomad acquisition, UraniumSA will pay a non-refundable deposit of $50,000 and issue 330 million shares of the company.
Nomad will also be issued performance-based shares and a 1.5% net smelter return royalty with respect to all minerals produced and sold from the project areas.
Analysis
Cobalt is an in-demand mineral and is likely to become even more sought after in future.
The Nomad tenements and UraniumSA’s own cobalt-prospective licence applications on the west coast of South Australia will place the company in an excellent position to develop a cobalt-based enterprise.
The demand for cobalt and support for developing new supply chains from stable jurisdictions like Australia is likely to continue for the foreseeable future.