My take on the lead-up to COB's Pre Feasability Study due in 6 weeks:
Assuming the study only includes the indicated resource (maybe plus a small fraction of inferred), the study mine life should be 11-12 years.
I'm guessing the cost per pound will be maybe $14ish.
The Cobalt price assumption used will likely be $25-30 per pound (in stark contrast to Ardea's PFS spot price assumptions).
We might therefore be looking at an NPV of $300-500mil.
So we're talking 2-4 times the current market cap BUT All of the assumptions have upsides:
1. The company has had unwavering confidence in achieving a 20 year mine life, so after a few more drill holes, the 20 year timeline should appear in the DFS.
2. With further testing and improvements in processing efficiencues (and LG energy solutions - a real difference they could make) OPEX should also drop for the DFS.
3. Given Citibank's recent bullish Cobalt price forecast, I wouldn't argue with a higher Cobalt price assumption.
Since the indicated resource target has been realised, there are no remaining barriers/risk to the farm-in.
Now here's where it gets interesting, COB shareholders may never see the DFS... LG telegraphed their intentions earlier this year by paying a premium for the JV immediately after seeing a sample of COB's final product. There is a strong possibility that they will bid for the entire company (at a premium) once the PFS lands. They would be securing future Cobalt supply via a highly profitable pure Cobalt mine at a bargain price (considering the value-add once the DFS lands).
In my opinion, a take-over would be a bit of a shame, as even though COB's share price should be in the vicinity of $2 by the time the PFS lands (and LG would have to pay a premium), it has potential to go so much higher.
