Cobalt Blue Holdings Ltd (ASX:COB) received confirmation that battery-driven demand continues to substantially outpace cobalt supply during a visit to its first mover partner LGI and sister company LG Chem in South Korea.
The company, which is the only ASX-listed pure cobalt player, ascertained that there is a strong appetite for stable, long-term supply with this topic dominating the Korean discussions.
During the visit, it became clear that battery industry participants want to understand how cobalt supply will evolve and that the company’s Thackaringa project is an important factor in their planning processes.
READ: Cobalt Blue Holdings’ foundation partner LGI will provide support to enter global cobalt production chain
COB chief executive officer Joe Kaderavek and feasibility studies manager Dr Andrew Tong met with LGI and LG Chem representatives during the visit earlier this month.
Kaderavek said: “Investors should be aware that LG Chem is a significant global lithium-ion battery manufacturer, and its recent announcement that it is doubling its capacity to manufacture Li-ion batteries is a signpost both for the market and for COB.
“We learned the timing of this new facility generally aligns with our overall timeline.”
Insight into cobalt markets
He said trips like this were extremely useful as they assisted in developing strong relationships with large traders/end users and provided COB with commercial insights concerning long-term plans in this sector.
“On a more global note,” he said, “the cobalt spot market continues to evolve as recent supply growth from the Democratic Republic of Congo suppresses pricing, however, long-term metal price forecasts remain unchanged and very positive.
“The Li-ion battery revolution is still in its infancy and COB believes that long-term cobalt pricing will continue to be driven by tight market balances.”
Cobalt Blue, in conjunction with Broken Hill Prospecting Ltd (ASX:BPL), has the Thackaringa Cobalt Project near the mining centre of Broken Hill for which a preliminary feasibility study (PFS) was released in early July.
In an update to shareholders, Kaderavek said the company was now progressing to a bankable feasibility study for its integrated cobalt strategy.
He said: “The PFS represents a strong technical baseline for the project, with the primary objective being to confirm project viability.
“In accordance with the JORC 2012 Code, the PFS provides a technically and economically feasible method for extracting and treating the ore, and hence COB was able to declare a maiden ore reserve statement.”
The company is progressing several option studies identified by the PFS in order to target revenue increases and possible cost reductions.
In regards to increasing life of mine beyond 12.8 years as stated in the PFS, COB is targeting a 20-plus year project and will undertake a sizeable drilling campaign planned to begin in September.
This would lead to an updated mineral resource estimate by the end of the March quarter of 2019.
Another revenue increase is possible with improved cobalt and sulphur recoveries and the company will undertake a significant bulk test work program with results expected around mid-2019.
This program will also enable COB to undertake more detailed marketing studies and build confidence with potential commercial partners.
COB is also working on possible cost reductions in areas including power and process plant tailings.
Kaderavek added: “We have significant upside catalysts for investors over the next 12 months, in parallel with our ongoing BFS.”