Hi
@Wilson!
Good question - and the reason I went to the AGM to actually meet everyone.
The directors were very tight lipped on details about upcoming Mt Thirsty developments and the potential resource size of the new cobalt tenement, but from questions posed by myself and other shareholders the indication is that things are moving ahead very well, the new tenement could be massive, and that discussions with Platx are positive. To me the directors seemed honest, were certainly very informative. I have no reason to doubt anything they said.
They could of course be exaggerating the cobalt opportunities, but from following commentators in the metals trading space (Chris Berry and Nick French etc) the high level of interest they have described is what I would expect (Chris Berry tweeted recently that he was fielding many calls a day from investment banks looking to discuss cobalt).
Also, the fact that Mt Thirsty is already very well defined gives me a lot of confidence (when compared to other cobalt juniors MT T is years ahead) and I see no reason to doubt the authenticity of the JV's work to date (much of which has been done by external parties).
The immediate risks I see for BAR while it is developing these resources are:
1: General global and ASX sentiment bouncing high risk stocks around
2: The gold price drops and mining BAR’s gold assets proves less economical. I’m betting on gold going up, but in this mad mad political climate, who knows.
3: The US$ drops sharply against the $AU. I'm betting the $AU drops.
4: One of their major projects hits a feasibility snag. This is why I like the fact that they have many projects. I also love that Mt Thirsty's proposed leaching processes are both off the shelf, simple and cheap, and the resource is close to infrastructure and shallow. Big ticks.
5: Nickel and copper prices jump significantly higher and so the cobalt price drops (on increased production as a bi-product). All the indicators are that this is not likely to happen, but we never know. Copper spiked recently, but a lot has been written about that rise being unlikely to continue – large surplus in global copper production predicted for 2017 etc. See below.
http://www.reuters.com/article/us-china-cesco-copper-idUSKBN13B0JV
http://www.bloomberg.com/news/artic...sustainable-analysts-in-disbelief-over-copper
4: New non-cobalt battery technologies are announced - i.e from Telsa (or another battery maker). I think this is unlikely as Tesla has just invested $1.7billion in Panasonic’s technology to make cobalt containing NCA batteries and (even more cobalt containing) NMC is the battery of choice for most new EVs being designed now and planned for rollout in the next 1-3 years. Chinese battery companies are reportedly moving into cobalt batteries as fast as they can, and to follow the money train, two Chinese companies have just bought up the Congo Tenke copper/cobalt mine (purportedly mainly for the cobalt) for a combined $4 billion +. Most analysts seem to think that cobalt containing battery technology has at least 5 years of growth ahead of it before new technologies (lithium Sulphur etc) pose a risk. But once again, who knows.
5: Longer term - running out of cash. I don't see this as a high risk. In terms of operations, BAR is lean on salaries, and conservative in its plans (lots of partnering to keep risk low). It also has a lot of saleable gold assets. And with around $2.5 million in the bank they have enough for at least a few years of general operations as well as to fund their ramping up of exploration and development work.
All up, of course there are a lot of risks. But if cobalt and gold keep rising in value I don’t see catastrophic risk in the MT T development phase over this next year or so. I think BAR is simply not on many investors’ radars as they’re yet to put much marketing into Mt Thirsty and are a very small gold producer. And as a result they get almost zero press (meanwhile Cobalt Blue and eCobalt etc seem to get a lot of attention). This lack of visibility was confirmed to me when I attended the AGM – it was very small. Hopefully this will change as they move into the Mt Thirsty PFS, update their website, begin producing gold with FMR and cobalt becomes more prominent.
There are my thoughts - all my own speculation, and I’m very interested to hear other's thoughts.
Cheers,
