Cobalt Blue Holdings Ltd (ASX:COB) is progressing optimisation studies as part of its plan to commercialise the Thackaringa Cobalt Project which hosts an initial ore reserve of 46.3 million tonnes at 819 ppm cobalt.
These studies form part of a BFS which is following up a recent Pre-Feasibility Study (PFS) which justifies proceeding towards commercial development of the project near Broken Hill.
The company, which is the only ASX-listed pure cobalt player, is developing an integrated cobalt supply strategy based on the Thackaringa project.
Cobalt Blue’s CEO Joe Kaderavek comments to Proactive Investors on the company’s progress with the project.
Can you update us on Thackaringa’s progress?
Joe Kaderavek: COB recently delivered a robust PFS for the Thackaringa Cobalt Project. The PFS displayed a world-class integrated mine-refinery delivering a battery-ready cobalt sulphate.
The project has outstanding low capital intensity with cash costs supporting operation through lows of the cobalt cycle. Further, as part of the PFS, COB delivered a minimum 20% cobalt sulphate product which will form the basis for future commercial agreements.
Describe the optimisation studies that are underway.
Joe Kaderavek: There are four optimisation studies for investigation in the BFS:
• Mine life extension: Substantial potential exists to extend project life targeting inferred inventories from the known resources and from other sources beyond Thackaringa.
A significant drilling campaign will begin shortly with results to be progressively delivered culminating in a new resource model by end of Q1 2019. A 20-year mine life is a vastly superior investment to the current 13-year study.
• Metal recovery optimisation: We adopted a conservative 85.5% cobalt recovery rate for the PFS (versus an already achieved 88% recovery). Larger scale testing will be conducted during the BFS, incorporating recycle streams, for which we are targeting a 90% recovery rate.
This again, substantially improves project economics. We will be releasing these results by the end of Q2 2019.
• Optimisation of power consumption/pricing: 22% of the site cash costs were related to electrical power. Strong opportunities exist for minimising energy consumption as well as distributed energy generation (solar photovoltaic) to substantially reduce these costs.
We will release results by the end of Q2 2019
• Process plant tailings: A tailings optimisation study will be undertaken with results to be delivered by end of Q4 2018.
That’s four major catalysts for COB in the next 12 months, starting in Q4 2018.
Can you recap the COB commercial strategy?
Joe Kaderavek: Our strategy is focused on maximising the payable cobalt whilst participating in the strong growth of the lithium-ion battery market.
Unlike the traditional cobalt mining model, Cobalt Blue is an integrated refinery model delivering battery-grade cobalt sulphate at a premium to the cobalt price.
Can you provide an update on COB’s commercial/investment relationships?
Joe Kaderavek: In the near term the investment market is ‘risk off’, with significant noise preventing more rational investment.
Investment feedback from global funds repeatedly stressed that COB is emerging as a top-tier investment opportunity for those seeking primary cobalt exposure.
COB remains very focused on understanding the battery market and our fit into the future production chain. Commercially, scarcity of supply beyond 2020 remains a strong market driver.
Battery industry participants and cobalt trading houses understand (indeed predicted) the current low spot cobalt price of around US$30/lb and point to emerging deficits over the horizon. It is these deficits that drive commercial behaviour relevant to COB, rather than the spot market.
The current cobalt market has sold off – what are you seeing?
Joe Kaderavek: Excess cobalt units are being produced by the Democratic Republic of Congo. These will take 12-18 months to work through, whilst pricing will likely remain in a trading range.
The equities ‘risk off’ mode is a separate matter. The market will revert to a more neutral stance, and will understand that pricing remains supportive of the Thackaringa Cobalt Project coming into production.