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March 28, 2024

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Cobalt is love: Why the blue rock is the next big thing – right now

The markets are a cycle. Everything has its moment.

Except the Ginger Beef Corporation (GB.V). That’s never had a moment. Like, ever.

Cobalt is having a moment right now, like a teenager gearing up for their first kiss, or a divorcee installing Tinder.

Cobalt prices are jamming upwards right now, and those taking part in the sector are enjoying the ramifications.

I know, I know, you’ve heard cobalt is in short supply before. Democratic Republic of the Congo is a dark place and all. I get it. Cobalt up.

cobalt prices

Whoa, WTF now? That’s not up, that’s parabolic. That’s a doubling of the price of cobalt in just four months. That’s the sort of action that saw lithium go triple hog wild crazy a year ago, and saw small players become huge literally overnight.

But this isn’t a ‘last few months’ thing. The price of cobalt has risen every single week for the last 26 weeks.

So, assuming this continues (and the chart points to a slowdown of that rise, but still no drop), where should your dollar go?

Well, we have some ideas.

Word on the street is the tightly held, recently minted, Sprott-backed, TSX big board vehicle Cobalt 27 Capital Corp (KBLT.T) – formerly Arak Resources – is going to be a big ass cobalt investment fund.

And if it isn’t, it should be.

The company is forward splitting 11 million shares to 33 million, and says it plans to “continue to refocus its efforts and aggressively pursue projects and opportunities in the battery metals sector.”

So that’s one to watch. One that may have already busted the gate open and fled the farm is Katanga Mining (KAT.T), which is actively mining in the Congo already, just tipped a billion dollars in market cap, and almost half of that has come from the last week of trading.

The last news the company put out was from back in February, when it said there were no corporate developments to explain it’s then sudden price rise. That was the first time the company’s stock tripled. It then crashed in the subsequent few weeks before jumping again over the last few. 2 billion shares out, and someone’s buying all of them. Today, anyway.

Then there’s little Scientific Metals (STM.V), which has lithium projects in Utah and Canada, and a cobalt project in sunny Idaho.

Between May and December of last year, Scientific couldn’t get arrested. The stock price, which had run for a little on the back of stage one cobalt mania, wasn’t getting support from news and the market rediscovered weed and we all took our eye off Scientific just long enough for them to triple their share price, and quick.

STM is at a 52-week share price high of $0.79 right now, and has been jumping in value by $0.25 basically every month for the last two. It’s not a ‘shock the world’ stock, it’s a slow builder in the right sector that hasn’t had to deal with big bleeding sell-offs or doubts that it can do what it says it will.

Hell, it also has a gold property, just in case two hot sectors isn’t enough to whet your appetite.

The specifics of these projects are almost irrelevant right now, because what the market is seeing at Scientific isn’t a question over grade or yield, it’s a question as to ‘What’s everyone buying? Why are they buying this? Am I missing out? I should buy it too..’

The front page of the Scientific Metals website doesn’t goof around. It features a video about cobalt mining in the Congo and, frankly, it’s not pretty. Canadian companies are lining up to do business in the dark continent, and despite robbery attempts and hostage situations and a government that could turn over at any time, there’s no shortage of folks who’ll take the risk, bulldoze a few communities to get at the blue, and process it on the cheap.

But that’s not tenable. The moment a North American cobalt option jumps out of the lake and says, ‘what’s up?’, the Congo ‘blood cobalt’ business dries up fast.

This is a strategic metal in undersupply to the point where large companies that do business with environmentally-conscious and human rights interested millennials are hoping nobody notices as they power-wash the blood from their ore.

Scientific Metals is going up because we need Scientific Metals.

And that’s just about the best investment pitch I can think of.

— Chris Parry

FULL DISCLOSURE: Scientific Metals is not an Equity.Guru marketing client, but has been in the past.

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