The recent share price correction is perfectly consistent with the move in the cobalt sulphate price. In March the 20.5% sulphate price was effectively $51/lb, trading at a 15% premium to the LME spot price. Today the LME spot is $36.75/lb and the sulphate price is trading at parity. Therefore the sulphate price has fallen 28%. If you lower the long term price assumption in the NPV model by 28% that causes the NPV to fall by 44%. This is pretty much exactly what has happened to the COB share price over the same time period. The entire price move is related to the sulphate price and not a reflection of changing fundamentals.
Typically companies re-rate as they de-risk and trade at higher P/NPV multiples. COB should do the same after the PFS. To achieve a substantial re-rate we need to sulphate price to play ball.
COB Price at posting:
96.0¢ Sentiment: Buy Disclosure: Held
