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In my quest for market smarts, I digested well over a hundred books on technical and fundamental analysis in my day. There’s an old saying that I picked up somewhere along the way that stuck. I can’t recall who uttered the words first – it’s not an uncommon adage – but I suspect it was Jack D Schwager who made it stick. It goes something like this: ‘when a stock exhibits positive price performance in the face of a decidedly negative backdrop, there are powerful underlying dynamics at work – dynamics which may or may not be fully understood by the market’.

Canada Cobalt Works (CCW.V) fits the description of just such a stock. It’s a standout. Its price trajectory and altitude are the upshot of a number of positive underlying dynamics at work… dynamics which enable it to buck the downtrend. Early shareholders are in an enviable position…

image courtesy of ujyaalonepal.com

To illustrate this point…

Take a look at the shit-kicking some of the better-known names in the battery metals sector have endured over the past few months – charts speak louder than words…

 

chart courtesy of BigCharts
chart courtesy of BigCharts

 

 

 

 

 

 

 

Obviously, it hasn’t been a pleasant ride for these shareholders.

Now take a look at the price chart for Canada Cobalt Works…

chart courtesy of StockCharts

An enviable position indeed.

A quick refresher on this standout company…

  • The company operates in a region which produced in excess of five-hundred million ounces of silver and over thirty million pounds of cobalt historically.
  • Their Castle Mine produced 9,410,095 ounces of silver and 376,053 lbs of cobalt in its day.
  • The company boasts fully permitted underground access to eleven levels covering some eighteen kilometers.
  • High-grade cobalt veins, with significant nickel and silver credits, fan out across the property.
  • Underground drilling is in full swing.
  • Bulk samples are being collected.
  • Metallurgical testing is ongoing.
  • A pilot plant is near completion to process ore from the first level of the mine.
  • Permitting the construction of a six-hundred ton per day mill on site is well underway.
  • Their proprietary Re-2OX metals extraction and separation process is being fine-tuned to produce battery-grade cobalt sulphate to end buyers in Asia.
  • The company appears well on its way to becoming a vertically integrated cobalt company.

Obviously, management is the key to any successful company. Frank J Basa, P. ENG., Director, President and CEO, and his team of highly competent men and women are establishing a solid a track record of under promising and over delivering.

(A more thorough cobalt and CCW company refresher can be found here, here, and of course… here)

The July 25th news…

I suggested in a previous article that the company appears to be firing on all cylinders…

image courtesy of Imgur

… that estimate appears to have been significantly reinforced with this recent news::

Canada Cobalt Launches Pilot Plant, Closes $1.5 Million Financing

The highlights of this news release are as follows…

  • Pilot plant assembly at the Castle mine is proceeding ahead of schedule with the jaw crusher, cone crusher and ball mill having been wired and commissioned. Mineralized material from the first level of the mine is now being crushed, while gravity and screen equipment is expected to be operational in the coming days.
  • Underground drilling targeting high-grade cobalt continues (25 holes completed to date) and is being extended through the balance of 2018 – a consistent flow of results will commence this quarter.
  • The company has closed a private placement with strategic investors in the amount of $1,449,054 at 65 cents per unit and is well-positioned and financed to achieve key milestones in 2018.

This is what investors were waiting to hear. Momentum is maintained as the company pushes to develop, process and concentrate its high-grade cobalt ore at the Castle mine with the ultimate goal of producing cobalt sulphate for end users in Asia.

The pilot plant…

The pilot plant is a critical step toward advancing the Castle Mine Project. With all of the components onsite and assembled, it’s close to full functionality.

Drilling…

Drilling off Castle’s multiple high-grade vein structures with the aim of developing a meaningful resource is another critical step. Twenty-five drill holes have completed to date. Eyes peeled and head on a swivel – there are a lot of assays coming down the pike.

The company is actually able to track these vein structures from underground – visual cues are abundant. And there is kilometer upon kilometer of potentially high-grade vein structure to track.

This video clearly demonstrates the ubiquitous nature of the Co mineralization at Castle – “… it just runs and runs and runs“.

Again, there is going to be a rather substantial volume of drilling/assay related news hitting the news wires over the coming months. As CEO Basa stated in a recent interview, this drilling could carry on for years.

Frank Basa (left), president and CEO of Canada Cobalt Works, discusses drilling with project geologist Douglas Robinson – image courtesy of Northern Ontario Business

Re-2OX…

The news release went on to state that gravity concentrates from the pilot plant will be shipped from the Castle mine site to SGS Lakefield in Peterborough Ontario for conversion into cobalt sulphate via the company’s proprietary Re-2OX process.

Re-2OX – a three-stage, environmentally friendly extraction and separation process – has the potential to become a company-maker asset in and of itself IMO. It represents yet another ‘positive underlying dynamic’ underpinning the share price performance the company (and investors) have enjoyed of late.

Canada Cobalt eagerly anticipates updating shareholders on Re-2OX during the first half of August.

Private Placement details…

The Company has issued 2,229,314 units at a purchase price of $0.65 per unit for total proceeds of $1,449,054. Each unit comprises one common share and one half of one share purchase warrant. Each whole warrant will entitle the holder thereof to purchase one additional common share of the Company at an exercise price of $0.90 per share for a period of two years from closing, subject to TSX Venture Exchange (“Exchange”) approval.

It’s good to see that company coffers are sufficiently topped-up to ensure uninterrupted progress going forward.

It’s good to see that the amount of the PP was keep modest, that shareholder dilution was held to a minimum.

I like that the PP went to ‘strategic investors’. I’m guessing the recipients were smart money types, those who recognize a good end-game when they see one (those unlikely to puke up their shares at the first hint of uncertainty).

What I don’t like? The ½ warrant. Yes, it is only a half warrant, but the quality of company management, not to mention its assets, should have negated the need for any such incentives. Nit-picking? Perhaps.

The Mill…

With everything that is going on between the Castle mine site and SGS Lakefield in Peterborough Ontario, let’s not forget that the company is in the process of permitting a 600 ton per day mill on site.

On this front, Jacques Monette, Canada Cobalt director and mine supervisor, stated:

Underground and pilot plant crews are doing an exceptional job. Shaft #3 has also been opened for a pump test as part of a study requirement related to permitting for a potential 600 tpd milling operation.

Final Thought:

Another one of those pithy maxims I came across during my studies goes something like this: ‘one of the hallmarks of relative strength, of a dominant sector-leading stock is… short, shallow corrections followed by sharp, rapid bounce-backs’. That about sums up yesterday’s trading in CCW (July 26th)

intra-day chart courtesy of Yahoo Finance

End

~ ~ Dirk Diggler

Full disclosure: Canada Cobalt Works is an Equity Guru client, we own the stock.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

Greg Nolan

Greg Nolan is a writer/investor based in Victoria BC. Having developed an appreciation for the outdoors at a very early age, he left high school and began an extensive career in the resource sector, working with a number of reforestation companies in various capacities before becoming a contractor himself. He found a niche as an operator specializing in technical, logistically challenging helicopter projects on the West Coast of Vancouver Island and the mainland inlets. His company, Rainforest Silviculture, was one of the most highly regarded treeplanting companies operating in BC. A manuscript he wrote detailing the first decade of his career in some of the more wild and untamed locales in BC and Alberta, was published in the summer of 2019 by Harbour Publishing. Greg has been following resource stocks since he was in his teens. New discoveries and 'end games' are his focus and passion.

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