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Cobalt Blue on track for Broken Hill Cobalt Project reserves statement

The company is building a metallurgical testing centre for the Broken Hill Cobalt Project and its processing technology.

Cobalt Blue Holdings Ltd - Cobalt Blue plans ore reserve statement and pilot plant commissioning in 2020
A 3D impression of the demonstration plant which is being constructed at Broken Hill

Cobalt Blue Holdings Ltd (ASX:COB) is on track to release an updated ore reserve statement in mid-2020 for the Broken Hill Cobalt Project (BHCP) in Far West NSW.

The pure-play cobalt company also plans to commission a pilot plant at Broken Hill for its cobalt processing technology by the end of the year.

COB's ore reserve statement will be based on the 2019 mineral resources and will incorporate other modifications to the BHCP since the pre-feasibility study (PFS), including tailings and waste management, power supply and cost studies, and updated mining schedules.

These inclusions are expected to improve the project's economics.

The target remains to produce cobalt sulphate at a cash cost of US$10/pound (C1 basis – net of by-products) which will place the project in the lowest cost quartile of cobalt projects globally.

Shares are more than 8% higher to 9 cents, up from 7.8 cents on March 25.

Pilot plant on schedule

A key stepping-stone on the company’s development path is to build a metallurgical testing centre in Broken Hill, with the initial pilot plan expected to be commissioned in the December quarter of 2020.

This centre will scale from an initial operation producing around 100-300 kilograms of cobalt sulphate from 90 tonnes of ore, to a larger-scale fully integrated demonstration plant producing 1-2 tonnes of cobalt sulphate using up to 2,000 tonnes of ore.

The results will form the evidentiary basis for the engineering designs and cost estimates for the BHCP feasibility study.

This centre will also allow COB to produce varying specifications of cobalt products, including mixed hydroxides and sulphates, for potential commercial partners.

Proposed pilot plan location

Supply chain impacts

Equipment has arrived on-site in Broken Hill and is in the process of installation.

The long-lead items, including leaching tanks and filter equipment, were ordered in September 2019 - well ahead of the outbreak of COVID-19.

Remaining pilot plant equipment will be largely sourced domestically, however, supply chains are anticipated to be slower than normal due to the economic effects of COVID-19, as well as hiring of shift personnel needed to run the facility.

Test work planned

In 2019, COB completed concentrate trials on 45 tonnes of ore at ALS Metallurgy and the 7 tonnes of resulting concentrate is being prepared for thermal decomposition (pyrolysis) trials.

These trials will produce approximately 1-tonne of elemental sulphur, which will be assessed by Mitsubishi Corp (TYO:8058) for market acceptance by its clients, as part of COB’s test work agreement.

The trials remain on track to be completed during mid-late April, however, the availability of personnel to run the trials may change if further measures related to social isolation in response to the COVID-19 pandemic are enacted.

Post COVID-19

The company remains focused on economic recovery post COVID-19 and is taking steps to preserve cash until early 2021.

These measures will primarily affect the timeline to pilot plant commissioning with the current estimate of quarter four subject to further changes as may be required.

Cobalt Blue planned timeline.

Development applications progress

The BHCP qualifies as a State Significant Development (SSD) due to project purpose and capital requirements, with the capital value exceeding A$30 million.

SSD approval provides an integrated assessment pathway and minimises the number of secondary environmental approvals that must be attained for a project.

COB advises that secretary’s environmental assessment requirements (SEARs) have now been issued for the BHCP and preparation work has begun towards delivering an environmental impact statement (EIS).

The NSW Department of Planning, Industry and Environment (DPIE) will exhibit and assess the SSD application.

SSD Application – major steps flowchart.

Quick facts: Cobalt Blue Holdings Ltd

Price: 0.125 AUD

ASX:COB
Market: ASX
Market Cap: $19.99 m
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