A very interesting Anncmt today from Highlands ( HIG) ,minority shareholder of the Ramu Nickel-Cobalt mine in PNG which bodes very well for the future of COB. It basically shows the high price interested parties are willing to pay to obtain a guarantee of a secure supply of Cobalt.
As we know COB is targeting production of 4 to 5000 tons of equiv.Cobalt metal/ year.
Well, Cobalt 27 (owner of one of the largest stock of physical Cobalt) is paying an upfront DEPOSIT of USD 113 Millionto secure an entitlement to 55% of Highlands share of Cobalt production ( and 27.5% of HIG share for the Nickel) from the Ramu mine for the life of the project ( 30Y min). It is a streaming agreement and you can find the details on HIG thread. If i understand correctly the current output of the mine is 34Kt/ y of Nickel and 3400 ton of Cobalt. But HIG share will only be 11.3% which means for the Cobalt portion of the deal 380 tons of Cobalt per year; so Cobalt 27 would get 55% of it =around 200 tons/y .... versus 4 to 5000 ton/y for COB. For the Nickel 55% of 11.3% of 34000T = 2150 tons/y: by doing an extrapolation, these 2150 ton of Nickel would be "equivalent" to 358 ton of Cobalt ( as price of Cobalt is roughly 6 times the Nickel price)..
So in total we would be talking about securing an equivalent of 560 tons of Cobalt/y for an upfront deposit of USD 118Million. Since at its minimum COB would produce 4000 tons/y it could expect a higher deposit for even just 25 % of its Co output. Food for thought.
To top it up Cobalt 27 is buying shares worth Au$ 15M at a 15% premium in HIG... the same premium LGI paid for COB last month.
The future looks really bright for COB.
COB Price at posting:
$1.22 Sentiment: Buy Disclosure: Held
