Sign up Australia
Proactive Investors - Run By Investors For Investors

Cobalt Blue Holdings’ Board confident of funding next stages of world-class cobalt project

Financing will be sourced through strategic partnerships, including the use of debt and equity.
Increasing stacks of coins
The company has an integrated cobalt strategy for the Thackaringa project

Cobalt Blue Holdings Ltd’s (ASX:COB) Board is confident it will be able to obtain funding to complete the next stages of the Thackaringa Cobalt Project without difficulty, including a bankable feasibility study (BFS).

COB’s Board considers that it has reasonable grounds for project financing and availability of funding as set out in the pre-feasibility study (PFS) released yesterday.

READ: Cobalt Blue Holdings delivers ‘comprehensive PFS that showcases Thackaringa Cobalt Project’

The quantum of funding required to produce a bankable feasibility study is the subject of a budgeting process which has not been finalised.

Projected costs from the BFS stage until the operations stage are outlined in the capital costs described in the PFS announcement.

The company has considered a range of options for funding prior to and during the expenditure of capital costs.

It is anticipated that finance will be sourced through strategic partnerships, including the use of debt and equity.

READ: Cobalt Blue Holdings’ PFS justifies proceeding towards commercial development of Thackaringa

The reasonable financing and funding grounds include COB’s commercial strategy, its processing technology, attractive project returns, economically resilient operating costs and an extension of mine life.

The commercial strategy for Thackaringa is to examine an integrated mine/refinery concept.

Traditionally, cobalt mines have sold cobalt as a by-product of copper or nickel and received a fraction of the value of the contained cobalt.

Focus on battery-ready cobalt product

COB’s strategic focus is on the battery industry and producing a battery-ready cobalt product, cobalt sulphate, at sufficient purity to enter the production chain directly.

This allows COB to sell directly into the battery industry and specifically to cathode precursor manufacturers representing the front end of the industry.

The long-term commercial strategy is to extract the maximum cobalt margin.

Board and management have a strong track record of attracting partner interest and attracting new capital, particularly due to the processing technology.

Investment from LG International

This includes a US$6 million investment from LG International, the resources investment arm of LG Corporation, acting in cooperation with LG Chem, one of the world’s largest lithium-ion battery makers.

LG Chem possesses strong technical leadership in the development of next-generation batteries, in particular for fixed storage and Electric Vehicles (EVs).

It is also one of the world’s leading EV battery makers.

Under the First Mover partnership LG will provide capital and technical assistance to COB.

Project returns

There are also attractive project returns.

Project capital costs are estimated at $550 million, including $66 million in contingencies, and about $24 million in pre strip.

The (production target) project return is $544 million delivering an IRR of 22%, well in excess of commercial cost of capital assumptions.

The project (production target) has a payback period of less than four years.

Examining capital intensity (US$/tonne cobalt production) at about US$115,000 per tonne, the project is a standout amongst its global peer group.

Resilient operating costs

Operating costs are also economically resilient.

The PFS delivered an operating cost (C1 US$/pound - net of sulphur) of about US$12.80/pound of cobalt and this is before upcoming cost optimisation studies (tailings and power).

The company believes that US$10-12/pound is a world-class benchmark and provides economic resilience.

The (real) cobalt price has dropped below US$12/pound only once in the last 40 years.

There is also potential to extend the project life by treating ore from inferred inventories from the known resources and from other sources beyond Thackaringa.

These represent opportunities for COB that would have significantly positive returns on capital. 

View full COB profile View Profile

Cobalt Blue Holdings Ltd Timeline

Related Articles

lithium in periodic table
July 25 2018
Ironridge has an extensive West African and Australian exploration portfolio
February 08 2018
The Gunnison Copper Project is slated for commercial production in the second half of this year
Mark Wilson and Mark Creasy with core sample from Nova-Bollinger
April 16 2018
Mark Creasy, who was behind Sirius Resources when it struck the jackpot at Nova-Bollinger has a 30% stake in the Rockford project and a 28% stake in Legend.

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use