Miners capitalize on cobalt’s sustained climb

Cobalt is making a definite comeback.

The ferromagnetic metal languished at approximately US$10.0 per pound this time last year, until prices gathered some heat and headed north to sit at approximately US$17 per pound today, a rapid rise that almost matches lithium in its severity.

Admittedly, the 70% jump is nowhere near the heights it reached in 2007, when it popped over US$50 per pound, but a slow and steady improvement nonetheless has been seen in spot prices.

This necessary component in the manufacture of wear-resistant and high-strength alloys has many other uses from dyes to animal health supplements, so it’s not hard to understand the importance of cobalt in our 21st century lithium-ion battery dependent world.

On top of this vital nature, global cobalt supply chain security has also been a concern, and impacts current pricing greatly. To illustrate, as of 2015, 60% of global cobalt production originated in the Democratic Republic of Congo (“DRC”), the same place that not long ago was also one of the key producers of blood diamonds.

Fighting has died down somewhat within the DRC, but the region is still in the embryonic stages of realistic democratic rule and its political stability is far from guaranteed. and, obviously, end use companies like apple and Samsung aren’t enamored with sourcing their ingredients from children being dropped in deep holes.

This sets the stage for a potential disruption in supply beyond the natural demand for cobalt as our green energy revolution ramps up. Why?

You may be surprised that the amount of cobalt in a lithium nickel manganese cobalt oxide battery (NMC), the most popular version of the lithium-ion energy storage combinations, is typically a 1-to-1 mix.

So as our need for lithium grows, our need for cobalt will grow similarly. And we’re going to need a lot of lithium. Companies operating within the cobalt space are capitalizing on this continuing trend.

Cruz Capital (CUZ.V) is one of them. This Canadian junior trading on the TSX Venture Exchange seeks to avail multiple prospects in mining friendly jurisdictions to development partners.

The company continues to grow its holdings as announced in November last year when Cruz upped its Hector cobalt property by 137 claims bringing the total land covered to 5,500 contiguous acres.

In total, this cobalt prospect generator has an extensive land holding in its portfolio including:

  • Hector Cobalt Prospect – this property, located in Ontario, Canada, has been mined for cobalt previously and has multiple other cobalt showings.
  • Bucke Cobalt Prospect – also located in Ontario, Canada with 1,480 acres in the Larder Lake mining division. Historic assays returned results grading 13% cobalt and 240 g/t silver.
  • Colman Cobalt Prospect – also in the Larder Lake mining division and comprises approximately 900 contiguous acres. The property also historically return assays results of 13% cobalt.
  • Johnson Cobalt Prospect – located in the Kirkland Lake mining district in Ontario, Canada. Historic grab assays returned up to 10.5% cobalt, 69 g/t silver, 12% nickel, and 0.4% copper over 300 metres.
  • War Eagle Cobalt Prospect – located in British Columbia. Historic non-NI 43-101 assay results show surface samples of 6.41% cobalt, 3.59% nickel and 7.25% copper.
  • Idaho Star Cobalt Prospect – located 19 miles southwest of Wallace, Idaho. The property is comprised of 44 contiguous claims within the Idaho Cobalt Belt.

At this point, Cruz Capital is the Walmart of cobalt. It was one of the first companies to sense the rise of the metal and, smartly, picked up a bunch of properties on the cheap. Having shown success in flipping them, I don’t think site development is likely to be a big part of their on-going business plan, but if the rate of phone calls to our office about cobalt are any indication, they’ll have no shortage of folks kicking the tires on each of their properties.

In Chile, LiCo Metals is doling big business on the lithium front, but is also placing a bet on the cobalt space with its property near the town of Cobalt, Ontario.

 

 

–Gaalen Engen

http://twitter.com/gaalenengen

FULL DISCLOSURE: Cruz Capital is an EQUITY.GURU client.

 

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