Cobalt Blue takes unique approach
Cobalt Blue Holdings (AU:COB) is confident that investors will appreciate not only its Thackaringa cobalt resource in New South Wales almost doubling, but also see the potential scale and strong margin offered by the company’s mining and processing plans.
MiningNews.Net
07 Jul 2017
12:00
Company Profile
Thackaringa diamond drill crew at the Railway deposit
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CobaltCobalt Blue Joe Kaderavek ThackaringaNew South Wales
The company is a recent spin-out of Broken Hill Prospecting Ltd (AU:BPL), which has turned its attention to heavy mineral sands.
Thackaringa was originally mined for silver more than 100 years ago, but activity soon moved 23km away to the “birthplace of Australian mining” – Broken Hill, the starting point for global mining major BHP (AU:BHP).
Now Thackaringa’s cobalt mineralisation is being uncovered and within six months, Cobalt Blue has upgraded the project’s resource to 54.9 million tonnes at 910 parts per million cobalt for ~50,000 tonnes of contained cobalt.
The company is targeting an indicated resource that will underpin a long life mine at 4,000t per annum cobalt production, a top 5 global mine.
“Thackaringa is a world class prospect – our view is driven by Thackaringa’s scale and strong margin potential,” Cobalt Blue Holdings CEO Joe Kaderavek said.
“Cobalt Blue is unique – we are the only primary cobalt play (80% cobalt revenue) on the ASX – we are focussed upon cobalt extraction and economics, with no nickel or copper pricing to derail the project,” he said.
“We are funded through pre-feasibliity and we have an aggressive timeline to bankable feasibility study delivery and project financing from mid-2019.”
He said the company’s aggressive drilling campaign was one of the largest in global cobalt and was setting out to prove Thackaringa was a significant cobalt ore body.
Feasibility studies were also demonstrating in parallel it would be capable of sustaining robust through-cycle margins, profitable down to half today’s cobalt spot price, with very efficient mining and processing techniques, he said.
The positive scoping study is amongst a set of milestones Cobalt Blue is rapidly achieving to earn 100% of the project.
The study identified strong processing options with associated economics and Kaderavek said Cobalt Blue was looking to produce a high value cobalt sulphate crystal – CoSO4.
“If you create a cobalt salt, CoSO4, you will receive 100% London Metal Exchange cobalt pricing on that, rather than pennies on the dollar for a concentrate, because you basically avoid the whole processing industry and go straight into the battery market,” he said.
“We’re cherry picking the best processes globally and looking to apply that in Australia. The results we’ve achieved so far through the scoping study suggest it’s very attractive.
“Our technical relationships span the best pyrite and cobalt processing technologies in the world.”
Management on a Chinese cobalt refineries tour in April 2017
Management recently returned from a commercial and technical visit to China (pictured, above) which Kaderavek said held three key highlights.
“Firstly, the Chinese have been commercially extracting cobalt for over 50 years, and technically they are very, very efficient,” he said.
“Secondly, the cobalt industry expects that today’s price (US$25/lb) is sustainable and allows strong upstream/downstream margins.
“Finally, there is a tremendous opportunity to produce cobalt salts (rather than lower value cobalt metal concentrates) for the lithium-ion battery market and realise strong premiums.”
“For investors we are different, we are worth a look,” said Kaderavek, who also brings a different approach to a junior resource company.
Cobalt Blue Holdings CEO Joe Kaderavek
He has an Aeronautical Engineering background, spent eight years running a hedge fund and previously was head of resources for Deutsche Bank.
“I went from the RAAF to an open cut mining role, which sounds a bit of a stretch,” Kaderavek (pictured right) acknowledges.
“But in reality, I transitioned from the logistics and operations of large, complex flying assets, to large and slightly less complex dirt-moving operations, when I worked on contract for BHP and Rio Tinto.
“I also spent a year as a consultant in a think tank essentially looking at energy storage, so my background is a combination of mining and understanding cobalt and its uses.”
The London Metal Exchange cobalt price has virtually doubled so far this year, with the price for three-month cobalt nearing US$60,000 a tonne in recent weeks.
Kaderavek is positive about cobalt’s cycle, driven primarily by energy storage demand.
“I think we have a 10 year above-trend price ahead of us,” he said, adding the company aimed to enter the market quickly and position itself as a long-term producer.
“My goal is for Thackaringa to be known as a low-cost, large-scale, safe and dependable cobalt producer for decades to come.”
Cobalt Blue received strong investor support with its successful A$10 million IPO in February and Kaderavek expects the share price to respond as the company proves up the processing and economics in the next six to 12 months.
“The market will come to understand we are assessing modern, efficient processing techniques that are highly automated and very low cost,” he said.
“We’re also unique in our transparency and providing three-year guidance about our development.
“We are funded to get through PFS and have a firm view we’ll become a developer and ultimately a producer – we’re not making a token effort to be one of the pack, we’re a serious development option.”
He is also looking forward to expanding knowledge of Thackaringa through a major geophysical survey programme.
“To date we have focussed on less than 5% of our acreage,” he said.
Thackaringa district view
“I am excited by the prospect that Thackaringa contains extensions of the significant ore we already know about.”
Its location, just 23km from the mining hub of Broken Hill, is another positive factor feeding into the project’s strong margins.
“It’s all about being low-cost, we are effectively an industrial estate on the outskirts of a major city, and far removed from a fly-in, fly-out, diesel-powered remote site as you can imagine,” Kaderavek said.
The project has access to people, rail, water, road and power, with the opportunity to tap into wholesale electrical pricing through the National Electricity Market substation just 19km away. Processing ore at wholesale power rates makes for a very low-cost operation.
The Thackaringa deposit lies within 2km of the railway line, built originally by BHP, that can take its product straight to Port Pirie for export.
“Our message is about margin, low cost and scale,” he reiterated.
“Investors can look forward to the next 12 months as we prove up the processing and economics and demonstrate that we can create a strong margin from a unique cobalt pyrite ore.
“Once we’ve done that, Cobalt Blue is going to be in a different category.”
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