What's in the bag B.B.??, page-293

Oil companies in talks with cobalt companies

This was in response to comments by Australian Mines (ASX:AUZ) managing director, Benjamin Bell who said that he had already had conversations with several oil companies who were, at this stage, merely on an information gathering expedition, but that could change within 12 months.
Indeed, if you are a protagonist for the benefits of diversification, it would be difficult as a shareholder of an oil and gas company not to support initiatives aimed at accumulating alternative energy assets such as cobalt and lithium.
Such a development could well drive cobalt stocks higher regardless of movements in the price of the commodity.
What this again reinforces is that the movers and shakers of the energy industry concur that the likes of cobalt and lithium will be increasingly central to powering the world.
In scoping out five potential cobalt stocks, what better place to start than Ben’s Australian Mines?
Australian Mines
With its arsenal of high quality cobalt assets that offer a mix of substantial exploration upside and relatively near-term production, Australian Mines presents as one of the pick stocks in the Australian cobalt sector.
Not only does it have three projects with one expected to come into production by 2021, it is the only battery metals company in Australia with a 100 per cent offtake agreement secured for both its cobalt and nickel.
As if this isn’t compelling enough, the company has also made substantial progress on the technological front, facilitating the production of battery grade cobalt sulphate and nickel sulphate from its demonstration plant in Australia.
The fruits of its efforts in this area materialised at the start of July when the company announced that it was scheduled to deliver 40 kilograms of nickel sulphate (NiSO4) and 4 kilograms of cobalt sulphate (CoSO4) to Korean-based off-take partner SK Innovation (Sconi project), setting a new benchmark for the largest known shipment of battery-grade cobalt and nickel sulphates from Australian mined and processed ore.
The demonstration plant is expected to continue to operate for the next 12 to 24 months and produce additional battery-grade material to supply SK Innovation’s EV battery manufacturing plants from ore to be sourced from the Sconi Cobalt-Nickel-Scandium Project in northern Queensland.
Management expects to announce delivery of additional, and larger shipments of both battery-grade nickel sulphate and cobalt sulphate material to SK Innovation during October - November 2018.
SK Innovation has signed a binding off-take agreement with Australian Mines for 100% of the cobalt and nickel sulphate production from the Sconi Project, for an initial seven year contract term with an additional six year extension option.
Under the supply agreement, SK Innovation will take up to 12,000 tonnes of cobalt sulphate per year and up to 60,000 tonnes of nickel sulphate per year following a ramp-up period.
Bell underlined some of the company’s unique achievements in saying, “The shipment of battery-grade cobalt and nickel sulphate that departs Australia this week for delivery to SK Innovation is not only the largest ever bulk sample export of these commodities produced using Australian nickel-cobalt ore, but it is also the first time an Australian resources company has produced cobalt and nickel sulphate samples without relying on a third-party commercial lab for any part of the process.
“Perhaps most significant for Australian Mines’ shareholders is the fact the material mined from Sconi and processed through our demonstration plant has exceeded SK Innovation specifications for purity and may therefore be used directly in the manufacture of EV batteries through SK Innovation’s world-class plants, which is another first for an Australian project.”
Another possible share price driver for Australian Mines is the potential for positive news flow from the company’s Flemington and Thackaringa projects in New South Wales with mineral resource expansion drilling starting at Flemington in the September quarter.