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Cobalt Blue Holdings Ltd holds key position in supply chain for lithium-ion batteries

Thackaringa is one of world's rare “pure cobalt” plays.
Cobalt Blue Holdings Ltd holds key position in supply chain for lithium-ion batteries
Investors can expect project related news flow

Cobalt Blue Holdings Ltd (ASX:COB) has confirmed its project’s potential after completing a scoping study on the Thackaringa Cobalt Project located near Broken Hill in New South Wales.

Thackaringa differentiates from other cobalt projects around the world, as it is one of the rare “pure cobalt” plays.

This means Thackaringa has the potential to focus upon cobalt. The vast majority of projects produce cobalt as a by-product.

Currently the end user cobalt market is starting to split into two, namely batteries or alloys.

Thackaringa is in the first category being able to deliver a lithium-ion battery precursor such as cobalt sulphate crystals.

This compares to cobalt concentrates to be used in alloy related markets such as magnets, ceramics, special glasses and tools.

Scoping Study key outcomes

Results indicate a technically and economically justifiable project warranting progression to the next phase.

After recently almost doubling the world-class Thackaringa cobalt resource, the scoping study results have now highlighted the potential scale and strong margins of the project.

In parallel with further development of the Thackaringa resource, Cobalt Blue’s priority is to prove the technical and commercial viability of key processing routes.

The company will specifically focus upon bulk sampling over FY18 to prove up the economics of the project.

High value cobalt sulphate crystal

The study identified strong processing options with associated economics and Cobalt Blue is looking to produce a high value product in cobalt sulphate crystal – CoSO4.

By creating CoSO4, producers are able to receive 100% of the London Metal Exchange (LME) cobalt pricing, rather than pennies on the dollar for a concentrate.

This is because products such as CoSO4 are used in the lithium ion battery market.

Cobalt Blue is currently cherry picking the best processes globally and looking to apply that in Australia.

Background

Cobalt Blue entered a joint venture with Broken Hill Prospecting (ASX:BPL), which together owns the Thackaringa Cobalt Project located 23 kilometre from Broken Hill in New South Wales.

The company currently has a 51% initial interest in the joint venture and has the option to earn up to 100%, which is intends to rapidly achieve.

The project has a total resource measuring 54.9 million tonnes grading 910 ppm cobalt across three deposits: Pyrite Hill, Big Hill and Railway.

Having recently completed a resource upgrade and delivered a scoping study, Cobalt Blue is now focused on a pre-feasibility study to be completed by 30 June 2018.

Cobalt Blue will look to expand its knowledge of Thackaringa through a major geophysical survey program scheduled for this current financial year.

Analysis

The study has demonstrated ~90% recovery rates into payable LME-grade cobalt metal, which is currently trading at US$60,000 per tonne.

This supports robust through-cycle margins allowing a future operation to be potentially profitable down to half today’s cobalt spot price.

Cobalt Blue's board view is that Thackaringa is a world class project driven by scale and strong margin potential, and the company is funded through pre-feasibility and has an aggressive timeline to bankable feasibility study delivery and project financing from mid-2019.

The goal continues to be for Thackaringa to be known as a low-cost, large-scale, safe and dependable cobalt producer for decades to come.

The project has access to people, rail, water, road and power, with the opportunity to tap into wholesale electrical pricing through the National Electricity Market sub-station just 19 kilometres away.

Investors can expect project related news flow over the next 12 months as the company proves up the processing and economics and demonstrate that it can create a strong margin from its unique cobalt pyrite ore.

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