Commodities go boom and bust. The cobalt could be a long boom,...

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sallywoofs

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13/03/18

22:58

Post #: 31730476
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Originally posted by DoubleDown! ↑

I like a lot of your analysis, it was a great post and I agree with much of it.

The thing I think that is overlooked and worries me the most is this rapid jump in prices for cobalt.

As sure as day follows night, busts follow booms. We've seen it with oil, iron ore, gold, rare earths - it will happen with cobalt too. The prices will come back, to what and when, who knows.

High prices make previously unprofitable lodes profitable, encourage technology shift towards cheaper substitutes and encourage new exploration to take advantage of the hot resource.

Longer term offtake agreements with some sort of hedged pricing is great for the miner and great for the purchaser. It offers security of revenue for the miner and producers can go a long way to fixing input costs to keep their products competitive and profitable.

Not everyone can afford to be a price taker and predictable supply quantity and price gives strength to the buyer and seller relationship.

Those are the sort of offtake agreements are what I would like to see for CLQ. The mine will have a life of decades and to stay viable it needs great customers. Minimising price risk for your output also helps in raising funds and financing. I think a lot of shareholders would be happy to give up a bit of risk for a more guaranteed return, even if it might be slightly less than what it could be.

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Commodities go boom and bust. The cobalt could be a long boom, but it will end sometime.
I think supplies in DRC finding their way to market or political settlement there
is the biggest short-term possibility to ease price pressure. But for the next 5 years I see little to stop tremendous pricing pressure.

CLQ Price at posting: $1.21 Sentiment: Buy Disclosure: Held
3 Upvote

0 Great analysis

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Commodities go boom and bust. The cobalt could be a long boom,...

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Commodities go boom and bust. The cobalt could be a long boom,...

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