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Cobalt Blue CEO outlines company’s progress and cobalt’s state-of-play

Published: 14:55 15 Apr 2020 AEST

Cobalt Blue Holdings Ltd - Cobalt Blue CEO outlines company’s progress and cobalt’s state-of-play
Demonstration Plant manager Adam Randall with the first equipment

Cobalt Blue Holdings Ltd this week released its quarterly report for the three months ending March 31, 2020, which outlined the company’s progress on the Broken Hill Cobalt Project (BHCP) and development of the company’s proprietary cobalt processing technology.

The report also outlined the current and future state-of-play in cobalt markets, incorporating developments in the Lithium-ion battery space.

In this Q&A with Proactive, the company’s CEO Joe Kaderavek discusses the company’s progress.

How is COVID-19 affecting business progress?

CEO: COB has never believed in treading water while the cobalt cycle recovers, however, the recent impacts of COVID-19 are inescapable.

  • In the near-term, we remain on target to deliver an updated ore reserve statement with refreshed project economics in mid-2020.
  • However, due to COVID-19, we have deferred pilot plant operations until end of this year in conjunction with our global cobalt sample program.
  • At the same time, we are also taking steps to preserve cash until early 2021 should circumstances continue to dictate financial prudence.
  • The feasibility study and project approvals remain due in quarter one of 2022 as per previous guidance.

Why update Broken Hill Cobalt Project economics?

CEO: COB previously delivered a pre-feasibility study (PFS) in July 2018. In addition to the 20,500 metres of drilling executed prior to the PFS, COB subsequently undertook a further 9,500 metres which expanded the available resource.

We have also progressed several optimisation studies adding significantly to project economics. These studies include:

  • Tailings and waste management;
  • Power/energy optimisation; and
  • Updated mining schedules.

At the same time, COB will set a more conservative long-term cobalt price expectation, likely in the US$25-29/pound range. This pricing reflects guidance from industry participants as well as specialist commodity consultants. By way of comparison, the 50-year historical annual cobalt price (2020 real) is approximately US$25/pound.

Our target remains to produce cobalt sulphate at a cash cost of US$10/pound on a C1 basis net of by-products over a 20-plus year operating life. The BHCP will thus become a top 10 cobalt producer by scale and a lowest cost quartile producer by economics.

Why are the recent Millennium Project results important?

CEO: It’s all about the Mt Isa/Cloncurry district of Queensland. This a proven cobalt/copper district that has never fully commercialised the cobalt/copper locked within sulphide mineralisation such as pyrite. That’s where our proprietary process, the COB process, comes into play.

COB has conducted extensive research over Mt Isa/Cloncurry, a district whose known resource both in-ground and in tailings contains over 200,000 tonnes of cobalt with generous copper and gold credits.

In parallel to our own studies, the Queensland Government Department of Natural Resources, Mines and Energy recently announced new initiatives to explore for ‘new economy minerals’ including cobalt. They are thinking along the same lines as COB.

The Millennium Project test work indicates that the COB Process could be successfully adapted to treat cobalt-copper-gold sulphides prevalent in the resource-rich Mt Isa/Cloncurry district. In effect, it’s our ‘ticket to the game’.

I should stress that our focus remains on the Broken Hill Cobalt Project, with these other districts providing COB with strong options under our ‘COB Partnerships’ business.

How is the Australian Government supporting COB and the battery industry?

CEO: During the quarter, COB was awarded $2.4 million of total Cooperative Research Centre – Project (CRC-P) Round 8 funding for research and development of the processing of cobalt-pyrite ore to generate battery-ready cobalt sulphate. COB will receive $1.57 million for the development and operation of its planned Demonstration Plant.

Looking forward, we are committed to working with the Australian Government and key industry participants (58 industry, academic and government partners including BHP (NiWest), Tianqi Lithium, IGO Ltd, Lynas Corporation and Syrah Resources) to understand whether the BHCP could fit into an Australian Battery (Pre-Cursor) Industry and therefore command significantly higher cobalt payables for our product. This cooperation is being conducted under the Future Battery Industries Co-operative Research Centre (FBI-CRC) scheme.

Finally, we recently met with the newly established Critical Mineral Facilitation Office (CMFO) to present our project and discuss how we can we work together with the Australian Government to develop a globally significant long-life cobalt project.

How does the BHCP fit into the Lithium-ion (Li-ion) battery industry?

CEO: Let’s examine key cobalt intermediate products and how the industry prices them.

  • Mine concentrate - (20-30% cobalt payable) needs significant further refining.
  • Hydroxide - larger cobalt miners have adopted an integrated mine/refinery approach producing cobalt hydroxide (approximately 75% of all intermediate cobalt is sold in this form) or Mixed Hydroxide Product (MHP = mixed nickel and cobalt hydroxide). Both these products command a 50-90% cobalt payable.
  • Sulphate - our strategy, supported by research being part-funded by the CRC-P Scheme, is for the BHCP to produce a higher value cobalt sulphate (90-110% cobalt payable).

Our cobalt sample program will ensure test samples will be delivered to key global precursor manufacturers. Aside from developing commercial relationships, this program will ensure that BHCP development will be informed from this comprehensive technical feedback.

BHCP and the cobalt value chain.

What are your plans for the next 12 months?

CEO: During the first half of 2021, we expect to complete the Demonstration Plant and ship much larger-scale product (battery production test samples). Battery makers will then be able to manufacture a custom EV battery. These test batteries will be used to gauge the quality of BHCP product and its fit into the EVs of tomorrow.

Imagine that, an Australian junior focused on having its cobalt products pre-accepted by global customers.

This will significantly de-risk the project and incentivise commercial negotiations. The overall BHCP development timeline is shown below.

Conclusion:

CEO: Thanks, look forward to updating the market further.

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