Gold is a side play for BAR to give the directors something to do. At least it tends to underpin the SP to an extent.
My thinking about Mt Thirsty goes like this. The problem with Cobalt and therefor Mt Thristy, is that Glencore can flood the market with dirty (unethically mined) cobalt any time it wants and still make money and drive anyone else mining cobalt to sell on the spot market, out of business.
Whilst the spot market price for cobalt is low, there is little incentive for buyers to lock in long term contracts, other than to avoid being hostage to Glencore. So whilst the spot price is low and relatively stable it makes sense for big buyers to keep a number of irons in the fire, with a view to enjoying low prices as long as possible and being able to lock in projects and pricing, but without committing until they need to. (Remember the comments about being in discussion with multiple potential partners...) I would expect big buyers would stockpile enough cobalt to last them through a cobalt price spike, whilst they get one of the numerous cobalt hopefuls up and into production with off-take agreements etx.
However, when the cobalt price starts rising, the buyers reach a point where they need to start locking in fixed price contracts. Whilst there is surplus in the cobalt market from existing miners, buyers can lock in pricing with existing producers if at a little higher price. No need to make any commitments to hopefuls like BAR,
So now everyone in the market is wondering what Glencore are going to do. That's just where Glencore wants to be. They'll be enjoying the current higher prices, but if they let it run too high, they risk making many hopefuls like BAR viable and driving buyers to them. However, Glencore cant ramp up overnight, so if they let the price, supply and demand equation get out of balance, they risk a short term spike in cobalt prices they can't control. There is the added risk to Glencore that if enough ethically mined cobalt comes onto the market, buyers may turn away from their dirty cobalt. They might then be able to bring on line clean cobalt, but will take time and they will lose money if they flood the market with the more expensive clean cobalt.
Sound complicated and volatile? No wonder the BAR directors have parked Mt Thirsty.
But if Glencore lose their grip on the market, Mt Thirsty and the JV will be close to the top of the pile of projects buyers will be interested in dealing with. If that happens, who knows where the price goes. AUX gave 10 bags to some, last time there was a cobalt run.
The current increasing demand for cobalt, reductions in stockpiles and prices put pressure on Glencore and pushing the whole equation outlined above closer to tipping point. The SP should have gone up, like that of other cobalt hopefuls (eg AUX). It hasn't, due to cheap CR's, MIN misreading the cobalt market and exiting and smart money looking to accumulate at low prices (to make a fortune if cobalt does run).
BUT I have committed more than I should to this gamble and Glencore still controls the market, so that is why I am a "hold", patiently hoping Glencore will lose grip of the market sooner rather than later.
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