Cobalt’s surge attracts string of market hopefuls

Screen Shot 2017-02-17 at 1.06.45 PMCobalt’s surge attracts string of market hopefuls

Like moths drawn irresistibly to light, the surge in the price of cobalt over the past few months has sponsored a couple of quick sharemarket floats and a rush of explorers hoping to latch onto the latest signs of life among some of the more exotic metals.

Just as lithium has won a lot of speculative investor support on the back of the prospects of rising demand with increased battery usage thanks to electric cars, even though any demand from this source is a decade away, at the very least, now it is cobalt’s turn.

Also giving cobalt a lift was the criticism of Apple Computer for sourcing its supplies of the material from uncontrolled mines in Congo, along with security issues in parts of that country that have raised additional questions over the security of supply.

Apple has said it will tighten control over its purchases of cobalt to avoid both child labour and harsh working conditions, although it has also said it wants to avoid causing too much disruption to the miners who need the income from supplying the high-tech giant.

In the process, the price of cobalt has surged around 40 per cent over the past few months to more than $50,000 a tonne, with the speed of the rally catching may in the market by surprise.

So, for a material that has been mostly an unwanted byproduct of nickel or copper mines, with usually very little value, the surge in its price has raised the prospect that standalone cobalt mines could be developed if the price rise proves to be sustained.

Geoff Hill, long-time investment banker and corporate adviser, initially to John Spalvins who spun a tug boat operator in Adelaide to a sprawling conglomerate owning breweries and department stores last century, was quick out of the blocks, launching a $10 million raising for Cobalt Blue. It was issuing shares at 20¢ in February that are now trading at more than 30¢.

Ditto for Ardea Resources, which also issued shares last month at 20¢ which are trading at more than 50¢ a piece after a recent run to more than 90¢. It was spun out of Heron Resources, and it is already touting a pre-feasibility study on some cobalt-nickel acreage near Kalgoorlie, which it is calling the “largest resource in the developed world”.

A host of others have figured out that pegging cobalt acreage might just give their share price sufficient lift to justify a quick fund-raising so they can eke out another few months of life. Last Tuesday, it was Latin American Resources disclosing acreage in Argentina and later in the week Cohiba​ Minerals was updating the market on some acreage it is looking at.

“There are a lot of companies looking at the potential, with what they’ve got,” said Mike Millikan, analyst with Hartley, pointing to Independence Group with its Nova project. “At the moment  there is a lot of interest but it is anyone’s guess how long it will last.”

Brian Robins

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