THE NEXT MINING BOOM COVERS NORTHERN COBALT
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New ASX Cobalt Junior Set to Drill NT Resource Next Week
Cobalt plays a critical role in the future of clean energy; a fact that isn’t escaping savvy resource investors.
It’s not like it’s easy to ignore. Rising demand coupled with supply issues is reflected in the sharp jump in the cobalt price over the past twelve months. Rallying sharply from a low of US$10/lb in 2016 to more than US$27/lb today, cobalt has been the year’s standout commodity.
The price rise is backed by solid fundamentals which are only going to continue. Cobalt is a critical component in the manufacture of rechargeable lithium-ion batteries, which is where half of the world’s cobalt production is used. And that demand is increasing backed by the massive growth that’s ahead for renewable technologies and electric vehicles (EV) in particular.
EVs alone will demand massive amounts of cobalt to keep up with rising demand. It is estimated that every sixth car sold in 2020 will be electric and that sales of electric cars and plug-in hybrid vehicles will hit 17 million in 2030. That’s a huge leap from the 778,000 EVs sold worldwide in 2016.
With this kind of growth, you might expect resource companies to be rushing into cobalt production. It’s true that many are adding cobalt to their existing operations. Nickel and copper producers, in particular, are increasingly mining cobalt as the payoff becomes more and more tempting.
Today’s company could tick the boxes. Having listed on the ASX today, this small cap explorer is focused on the lucrative business of cobalt, without the distraction of other commodities, and it comes with an existing JORC 2012 Mineral Resource of 500,000t at 0.17% cobalt. The high-grade of 0.17% cobalt comes in well above the average grade seen in Australia of 0.11%.
This is a speculative investment however and investors should seek professional financial advice if considering today’s company for their portfolio.
On top of that, it’s in the mining friendly jurisdiction of Australia’s Northern Territory.
That location in itself is a major draw as manufacturers of renewable technologies scramble to secure ethically mined cobalt supplies from politically stable jurisdictions.
Currently, more than half of the world’s cobalt supply comes from the Democratic Republic of Congo (DRC), where there are ethical and sovereign risk concerns. Major multinationals are coming under increasing pressure to secure ethically sourced cobalt for the manufacture of their products, and Apple and Tesla, for example, have made a conscious effort to find alternative sources to DRC-mined cobalt.
This leaves a gaping supply hole to be filled by producers in first world mining friendly jurisdictions… including Australia.
All this comes as cobalt demand surges, and as the rise of new and innovative technologies — such as rechargeable batteries and electric vehicles — begin to gain traction.
The investment potential on offer from cobalt stocks isn’t new to readers of The Next Mining Boom, yet this company has a unique and targeted approach…the benefits of which include lower costs of production.
Worldwide, there are very few specialty cobalt producers, with 94% of all cobalt produced being the by-product of nickel and/or copper mining with cobalt refined from a concentrate. That means just 6% of all cobalt comes from projects that are solely focused on mining cobalt.
This leaves few options for small cap investors who are searching for a focused investment exposure to an up-and-coming cobalt junior.
Today’s company has identified the significant upside potential in supplying much needed cobalt and is honing in on cobalt, and cobalt alone. Once it has its cobalt production up and running, this strategy will prevent the watering down of its profit margins by being leveraged to the price cycles of other commodities. This doesn’t mean the company is narrowly focused however. The company intends to look at other commodities in the cobalt cycle if and when they make economic sense.
As early as next week, it is set to begin drilling at prospects that were previously explored in the 1990s. The cobalt potential was overlooked at the time, as it was not then the ‘in-demand’ commodity that it is today, commanding premium prices.
Introducing the ASX’s newest cobalt junior…