What is it about Cruz Cobalt Corp (CVE:CUZ) that really makes it stand out? There are two answers, but they are tied into each other.
Because Cruz moved into the cobalt space while most investors were still fretting about their lithium exposure and hadn’t even thought of a position in cobalt, Cruz was able to take its pick of the available land packages.
Early in the space...
That leads onto the second factor: because Cruz was early into the space, it’s already up and running. It’s cashed up and exploring across a range of properties in the US and Canada, including some of the most prospective cobalt ground in the world.
“We are one of the most active potential suppliers of cobalt anywhere on earth at the moment,” says President Jim Nelson.
“We were able to get all the property we wanted, in Montana, Idaho and Ontario. We were able to pick and choose the properties we wanted.”
It’s a portfolio which is second to none in terms of junior mining companies, and it’s likely to be generating a lot of news and interest as crews were mobilized in Idaho in mid-August, airborne work was completed on four Ontario prospects just a few days before that, and permits are already in place for follow-up drilling, while work continues on a property in Montana.
“We’re fully cashed up to undertake these work programmes,” says Nelson. “We have three different areas that could give us a significant boost. And we are the most active company in the sector.”
Head of the pack...
That sets Cruz up right at the head of the cobalt pack. With all this exploration work ongoing, the shares look really poised for a breakout.
It’s partly the quality of the assets that underlies this evaluation, partly the high levels of activity. But it’s also, more fundamentally, the increasingly favourable outlook for cobalt.
Cobalt has really come in from the cold as a metal of choice for investors over the past 12 months. For the first time in years we see Glencore (LON:GLEN) singling out the metal for special mention in its results commentary.
But Nelson reckons this is just the start.
“The outlook for cobalt is going to be exploding,” he says. “The industry is so tight. Traders are going to take this market and jam it.”
Cobalt, like lithium is being driven by new technology paradigms that have never before been factored into the pricing.
“Nine years ago,” says Nelson, “when cobalt prices last spiked, demand was mainly for colouring and alloys.” Now, though, it’s batteries and electric vehicles, and investors are exploring whole new worlds of opportunities. And cobalt is by no means as abundant as lithium.
“That’s why,” says Nelson, “everyone’s hoarding cobalt. Everyone’s coming out of the woodwork. What’s more, they’re saying we want 20% of your company so we can have all of your product. That tells me the commodity’s going to go way higher.”
With all that in mind, it’s easy to see why Nelson believes Cruz has the momentum in its favour. But it’s not just going to be about proving up resources in the ground. Already, Cruz has demonstrated its ability to be nimble, closing off the sale of an Idaho project to US Cobalt Inc. (CVE:USCO) late in 2016.
This is a company that’s comfortable in the newly emerging cobalt space, that’s prepared to move in and out of assets, to close off a good deal and find, spot and secure new opportunities.
With other cobalt companies only just now beginning to catch up, it’s easy to see why investors have already pushed the price of the company’s shares up by a factor of four in the past 12 months. There should be more to come.