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AUZ: Unlocking Value in NSW Cobalt

PUBLISHED: 30-11-17

There’s no getting around it. We’re moving towards a greener, low-emissions future faster than you can say ‘Tesla-powered electric vehicle revolution’.
The global EV battery market is set to grow at a compound annual growth rate (CAGR) of 41.95% between 2017 and 2021. And according to Wall Street research film, Bernstein, EVs could represent 40% of all car sales in 20 years’ time.
Crucial to this increasingly pervasive shift will be access to an adequate, reliable supply of key battery metals, including cobalt and nickel.
One ASX developer that could be on its way to emerging as a major global supplier of raw materials to this burgeoning sector is Australian Mines (ASX:AUZ).
AUZ has taken early notice of this global movement towards renewable energy sources and battery technologies, and this emphasis shows in both its underlying strategy and portfolio.
AUZ has two world-class, JORC compliant cobalt, nickel and scandium projects in NSW and Queensland: Sconi and Flemington.
Each of these is estimated to have a mine life of at least 20 years, and have the potential to provide some 95% of the raw materials used in emerging battery technologies.
It’s no surprise, then, that AUZ has piqued significant interest from battery manufacturers, as well as other international companies that operate in the energy and automotive spaces.
In turn, this has placed AUZ directly on the radar of some of the world’s biggest investment houses.
Of course, AUZ remains a speculative stock and investors should consider professional financial advice if considering this stock for their portfolio.
AUZ’s recent placement to international institutional investors was oversubscribed by almost three times the initial amount sought — a crystal-clear endorsement of the high-calibre nature of its projects and nimble development strategy.
The funds raised to the tune of $20 million put AUZ in a very comfortable position to fast-track development of its assets, including completion of its Bankable Feasibility Study (BFS) at its Sconi Project in time for April next year.
In support of the BFS, AUZ is continuing trial mining, and is also constructing a demonstration-scale processing plant in Perth that will be capable of producing commercial-grade samples of cobalt sulphate, nickel sulphate and scandium oxide to progress its negotiations with potential off-take partners and financiers – discussions that are already well advanced.
At its Flemington Project, moreover, AUZ has plans to extend and increase the existing mineral endowment through a series of targeted drilling campaigns. A pre-feasibility study (PFS) for Flemington is also set for completion by mid-2018.
An important thing to bear in mind here is that Flemington is the direct western continuation of Clean TeQ’s (ASX: CLQ) Syerston ore body (recently renamed Sunrise), separated only by a tenement boundary.
This was recently confirmed by its Flemington maiden cobalt mineral Resource estimate, which has strong potential for amplification.
As a larger cobalt peer, moreover, CLQ itself also provides an intriguing comparison.
CLQ’s market cap is nearing $1 billion, and is currently circa $830 million.
AUZ is currently valued at $235 million – that’s around a quarter of the market cap of CLQ.

AUZ’s Sconi Project, which is the most advanced project of its kind in Australia, is very much comparable to Sunrise in terms of Resource, expected feed grade and processing efficiency. In fact, it has approvals in place and potential exploration upside that give it an edge over CLQ…
At the rate it’s going, AUZ could stand to critically disrupt the uneven supply/demand dynamics that underpin the cobalt market.
All in all, this ASX small-cap has had a big year, and there’s still more to come.
In the remaining weeks of 2017, AUZ’s first commercial battery-grade products are scheduled for shipment.
It also expects assay results back from its Resource expansion drill at Flemington this month… all of which translates into more waves of newsflow for this fast-moving company.
Without further ado, let’s check back in with:
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Australian Mines Limited
ASX: AUZ