According to the PFS and other recent releases there are about 20Ktonne of cobalt and 25Ktonne of nickel recoverable. If you look at current prices that's worth about US$1.5B. In very rough terms, it will take about half that money to get it out of the ground. That's a fair bit of profit, but much of that disappears if prices fall. So the value of that potential profit now - the net present value according to the PFS is assessed at $44M. With changes in exchange rates and price movements since then - say $35M now.
In other words, that's an asset worth $35M sitting there, if someone wants to buy it. Compare that to the total market cap of BAR now of about $13M, saying nothing of the gold resource.
The cobalt market is unusual. There are no cobalt mines as such. It is usually a byproduct of nickel and copper mining. About 75% of world cobalt comes from the Democratic Republic of Congo - much of which is controlled by either China or Glencore. The DRC government is talking about taking control of it all. The potential for world cobalt price manipulation is huge.
Battery makers are trying to build low cobalt batteries due to the risk of said countries and company deciding they would do well from high cobalt prices. However, it seems the best and cheapest battery formulations still have to have some cobalt.
To put BAR's total resource of 20Ktonne in perspective, total world use of cobalt atm is about 140Ktonne.
Google says Tesla use about 2Ktonne of cobalt a year. Say Tesla or VW or some other big lithium battery manufacture wants to lock in their battery chemistry for a few years based on some cobalt and want to hedge against cobalt price manipulation. They'd want 10 years supply in a rock solid politically stable country and a resource they can get into production quickly if they need to. Where would they find that around the world?? What would they pay for it??
That value is sitting in the ground at Mt Thirsty. It will be unlocked one day. The EV metal scramble has started. Question is, when, and how much (if any) of that value will flow through to us retail investors at the bottom of the food chain?? That's the opportunity and risk equation in a nutshell. I'm guessing we'll get some idea by Christmas.
BAR Price at posting:
2.0¢ Sentiment: Buy Disclosure: Held
