JRV Cobalt, page-336

There's some comments on JRV in Hallgarten & Company's recent research report on cobalt (h/t to @zempheth). The comments are fairly positive given the overall tone of the opening piece of the paper is about how many cobalt 'fakers and pretenders' there have been in the space. It does suggest that at the current market cap Jervois has a "ritzy valuation", but that if it fell further it'd become a candidate for their long portfolio.

Excerpt here:

The prime survivor (and performer) from the recent crop of Cobalt “developers” is Jervois Global (ASX:JRV, TSX-v:JRV). Its asset base in Cobalt consists of its 100%- owned Idaho Cobalt Operations (ICO) and its Cobalt processing plants in Finland and Brazil. The Idaho project came on board via the merger in July 2019 with eCobalt Solutions (TSE:ECS), this brought along the relatively advanced but perpetually stop- start construction project in Idaho. The transaction followed upon Jervois’s earlier takeover of M2 Cobalt Corp, an East African-focused exploration company with assets in Uganda. It might be remembered that Uganda (at the Kasese site) had long been one of the few primary Cobalt producers in the world (with Morocco being the other notable example).

Then Jervois acquired the Sao Miguel Paulista (SMP) nickel and cobalt refinery in Sao Paulo, Brazil from Companhia Brasileira de Alumínio (part of the Votorantim grouping) in September 2020. The SMP Refinery had annual refined production capacity of 25,000 metric tonnes of nickel and 2,000 metric tonnes of cobalt and was on care and maintenance. The cash purchase price was R$125 million (US$22.5 million), payable in tranches. The Finnish processing plant had a long history as it had originally belonged to Outukumppu. When Jervois, in September 2021 purchased from Freeport McMoran all the shares of Freeport Cobalt Oy, and four affiliated entities from Koboltti Chemicals Holdings Ltd. (KCHL), for US$160 million it finally became clear that the “rubber was hitting the road” at Jervois and it was not just one of the horde of fakers in the Cobalt space. In the game of Monolpoly where strategic Cobalt play pieces were the assets to go for it would appear that Jervois had cleaned up several sides of the playing board and brought them under its control.

Jervois has stated that it expects to commence mill commissioning in Idaho in September 2022, with full production forecast for February 2023. This will be the US’s first cobalt mine “for generations” when commercial production commences later this year. An official opening ceremony for the ICO mine is scheduled at site for early October, with expected participation of U.S. political leadership and Australian government delegates. Jervois trumpets that it remains actively engaged with the U.S. government with regard to the geopolitical and economic importance of their endeavour. In a sign of its drift to a US-orientation, it has recently announced the change of its accounting currency to the US$.

At a market cap of around AUD$780mn, it still appears rather ritzy in valuation despite the fact that it is trading at half its 12-month highs. If it came significantly lower, then it would definitely become a LONG candidate for the Model Resources Portfolio.

Full report here: portfolio_June2022 (hallgartenco.com)