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Broken Hill Prospecting working with JV partner to realise value of major cobalt asset

The Thackaringa Joint Venture is working on processing options, including a ‘cobalt concentrate only’ process.
Cobalt sample rock
The project is a potential source of high purity cobalt for the battery industry

Broken Hill Prospecting Ltd (ASX:BPL) is working with joint venture partner Cobalt Blue Holdings Ltd (ASX:COB) to realise the potential of the Thackaringa Cobalt Project to be a world-class cobalt producer.

The partners believe this will be delivered once an optimal process route for the project near Broken Hill is identified.

The Thackaringa Joint Venture (TJV), of which Cobalt Blue is the manager, is working on various processing options for an integrated cobalt production strategy.

Cobalt only processing alternative

These include an alternative ‘cobalt concentrate only’ process as a potential pathway to commercialisation.

This alternative was not addressed in the recently delivered pre-feasibility study (PFS).

READ: Broken Hill Prospecting confirms robust pre-feasibility results for Thackaringa Cobalt Project

The PFS confirmed that the Thackaringa project is of global significance as a sustainable, low-cost source of high purity cobalt sulphate for the battery revolution.

It recommends advancing to a bankable feasibility study (BFS).

In an announcement today BPL said: “As the tenement holder and an active explorer in the Broken Hill region, BPL is delighted with the outcome of the PFS.

“It vindicates the company’s long-held exploration strategy and highlights the ongoing exploration potential of its major assets.”

2% net smelter royalty

As part of the joint venture terms, BPL retains a 2% net smelter royalty on cobalt produced from Thackaringa.

This is anticipated to deliver revenue of around $43 million to $48 million over the life of mine and the company is now evaluating the basis of the PFS royalty and its market value today.

BPL is assessing the PFS to determine whether COB has satisfied the individual stage II milestones of the TJV.

The TJV Management Committee has also appointed an independent expert to review the PFS and this work is expected to be completed by the end of August.

READ: Broken Hill Prospecting advises joint venture partner of cobalt project stage I earn-in

COB can earn an interest up to 100% of the project if it completes a four-stage farm-in.

To do so, COB must commit $10.9 million in project expenditure before June 30, 2020, and pay BPL $7.5 million in cash.

Satisfying the stage II requirements would see COB’s interest increase to 70% from the current 51%.

BPL said that whichever BFS strategy was ultimately adopted, the timeline to delivery would be measured against the TJV contractual obligations and the requirements to demonstrate a bankable project.

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