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Cobalt Blue Holdings Ltd enters sulphur agreement with Mitsubishi Corporation, shares jump

The early stage trial product agreement represents a development milestone towards potential future offtake arrangements for elemental sulphur.
Sulphur samples
COB aims to supply elemental sulphur, turning powdered sulphur (left) into a high-quality prilled form

Cobalt Blue Holdings Ltd (ASX:COB) has entered into an agreement with Mitsubishi Corporation for market evaluation of elemental sulphur from the Broken Hill Cobalt Project.

COB aims to be a new supplier of elemental sulphur, which will provide an additional revenue stream to the primary cobalt sulphate to be produced at the project, previously called the Thackaringa project.

The company, which is targeting annual production of up to 4,000 tonnes of cobalt and 300,000 tonnes of elemental sulphur, believes the Mitsubishi agreement will help facilitate its sulphur aims.

Investors have responded positively with shares up as much as 78% to an intra-day high of 24 cents.

In this Q&A with Proactive Investors, Cobalt Blue’s CEO Joe Kaderavek comments on the sulphur agreement.

Proactive Investors: What is the significance of the latest announcement?

Joe Kaderavek: Mitsubishi is an active global sulphur market trader. This early stage trial product agreement between COB and Mitsubishi represents a development milestone towards potential future offtake arrangements for elemental sulphur.

COB intends to produce up to 100 tonnes of sulphur from bulk test work trials over the next 18 months.

Proactive Investors: How important is sulphur to the project?

Joe Kaderavek: The Broken Hill Cobalt Project aims to become a globally significant primary cobalt producer. Cobalt sulphate represents approximately 80% of project revenue, with elemental sulphur sales contributing approximately 20% of revenues.

Our aim is to produce 300,000 tonnes of elemental sulphur per year.

The Australian transcontinental railway passes through the tenements and will allow COB to efficiently freight sulphur to domestic buyers, or export through any of the Spencer Gulf ports surrounding Adelaide, South Australia.

COB is working with Enersul (Canada) to turn the powdered sulphur into a high-quality prilled form. This is suitable for long-distance transport and rehandling, without production of excess dust or fine particulates.

Proactive Investors: Why does the Broken Hill project produce sulphur? Why not sulphuric acid?

Joe Kaderavek: The Broken Hill Cobalt Project contains a large resource of cobalt in pyrite. Historically, the approach was to roast the pyrite which would produce sulphuric acid, excess energy, and a residual calcine which can be difficult to leach for cobalt.

In contrast, our innovative approach is to thermally decompose the pyrite, which generates elemental sulphur, and a readily leachable calcine for subsequent cobalt extraction. The process avoids the significant capital and operating costs for production of large quantities of sulphuric acid, and thereby minimises the safety risks associated with handling, storage and transport of acid.

Australia imports over 1 million tonnes of elemental sulphur (equivalent) per annum, mostly from Vancouver, Canada, with over 50% going into the domestic fertiliser industry. This demand is forecast to rise steadily.

Overall, COB is aiming to be a new supplier of elemental sulphur and the only significant producer within Australia. This will enable COB to strategically supply end-user markets throughout South East Asia with minimal logistics costs.

A summary of our process flowsheet is shown below.


Proactive Investors: COB recently attended the Cobalt Institute Global Conference – what were the key takeaways?

Joe Kaderavek: Our executive manager Andrew Tong attended the 2019 Cobalt Institute Conference in Hong Kong on May 15 and 16. The conference had a record attendance of more than 300.

In addition to updates on the changing regulatory framework for ethical and sustainable cobalt, much of the conference was devoted to reflecting on the recent cobalt price spikes in 2017-2018 and how this would impact future supply and consumption.

The general view was that future demand over the coming decade remains strong for cobalt, with supply needing to increase two to three times on 2019 production, to meet a six-times increase in battery gigawatt factory output by 2028.

However, in the near to medium term, cobalt prices are expected to appreciate slowly and bottlenecks in the supply chain from mine to refined cobalt sulphate have largely been removed due to massive investment in the sector since 2017.

Proactive Investors: COB is undertaking a fund raising, can you update us?

Joe Kaderavek: We are raising funds for advancing large-scale metallurgical test work programs being undertaken since the completion of the PFS in mid-2018. This includes increasing the scale of the program to a total of 90 tonnes of ore and produce cobalt sulphate and elemental sulphur for marketing assessment.

READ: Cobalt Blue raising funds to support large-scale test work at Thackaringa project

The COB Entitlement Issue closes at 5pm on Monday, June 3, 2019. The support from shareholders has been very strong, with a number requesting further stock via the top-up facility. If any shareholder has not received their offer documents and application forms please don’t hesitate to contact COB on [email protected]  or (02) 8287 0660

Proactive Investors: Thankyou Joe.

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