Sometimes the market reacts as we think it should and sometimes it doesn’t. The recent market reaction to a Canada Cobalt Works, (TSXV: CCW) (OTC: CCWOF,) press release proves that good news still has the ability to move share prices in the right direction.
According to a November 2, 2018 story in mining.com Canada Cobalt Works shares rose almost 12% after the company hit high grades at its flagship property, the Castle Mine, located in the Cobalt silver/cobalt camp, near Cobalt in Northern Ontario.
Recent drilling at Castle returned high grade vales for cobalt, silver and nickel.
- 2.8% cobalt, 261 g/t silver and 1.65% nickel over 7.00 meters in hole CA18-001
- 1.87% cobalt, 4,763 g/t silver, 1.29% nickel and 1.19 g/t gold over 2.54 m in CA18-002
- 3.16% cobalt and 10,741g/t silver (345 ounces per tonne) over 0.60 meter in hole CA18-003
In the November 2, 2018 press release, president and CEO Frank Basa said: “These cobalt grades are very high in a global context and demonstrate the unique opportunity at the Castle mine, from which we have already created battery grade cobalt sulphate through our proprietary Re-2OX process for evaluation by clients in Asia and Europe,” To put the Castle mine cobalt assays into perspective, most cobalt is a fractional derivative of mining copper, nickel, manganese or arsenic. Low results, such as 0.5%. are considered a high grade for cobalt.
As well as showing cobalt grades at the top of their class, the press release also underlines that Canada Cobalt Works is working on a far sighted strategy that includes capturing as much of the Chinese market as possible.
According to the Cobalt Development Institute, 94% of cobalt is produced as a byproduct of copper and nickel mining. Of that more than 50% comes from the Democratic Republic of the Congo and is usually described as “conflict cobalt.”
Conflict cobalt is just one of the reasons that cobalt mining in North America and other parts of the world is taking off. Just as blood diamonds helped power Canadian diamond exploration, and production, conflict cobalt is driving the search for ethical cobalt in jurisdictions that are politically stable. Tesla, for instance has long been known to be searching out secure North American cobalt for its supply chain.
According to a story in the Financial Post the cost of cobalt has risen from US$22,000 a ton in 2016 to US$90,000 a ton in 2018.
Cobalt is considered a “Critical Raw Material,” because of its use in lithium-ion rechargeable batteries used not only by the military but the general public as well. These are the batteries that power electric cars, (EVs), laptops and cell phones.
While consumer electronics will remain a strong battery metals driver EV demand is expected to multiply. A recent report by McKinsey&Company sates, “The underlying driver for both lithium and cobalt demand is the EV revolution, which is gathering pace. The latest estimates from McKinsey’s Future Mobility Initiative, suggests that global EV production will increase from 3.2 million units in 2017 to 13 to 18 million units to 26-36 million units in 2030.” The report also forecasts that China will account for 50%-60% of EVs by 2030.
Around the turn of the last century Cobalt in Northern Ontario went through a massive silver rush. Mines in the Greater Cobalt Camp produced over 500 million ounces of silver and over 30 million pounds of cobalt. Canada Cobalt Works has established a unique position for itself in the Cobalt Camp. It may also have a first mover advantage because of its advanced status.
Canada Cobalt owns the Castle Mine, which was formerly one of the highest grade silver-cobalt properties in the camp. Castle eventually closed down when silver prices went through a slump. As the price of cobalt began to rise, junior mines started exploring for cobalt in both abandoned mines and in green belts.
Canada Cobalt is the most advanced cobalt mine in development in the Cobalt Camp. It is the only mine that has permitted access to underground workings. Level 1 has now been modernized for safety and efficiency and the company intends to drill through the winter. Once again it is also the first company in the Cobalt Camp to start underground drilling. The company also believes it has found a new discovery 1.5 km east of the mine.
If you put the extremely high cobalt grades to one side, along with the silver, nickel and gold showings, Canada Cobalt also has an advantage that no other producer can offer. President and CEO Frank Basa has developed a proprietary metallurgical process to refine cobalt without the expense and time it would take to build a smelter. Not only is building a smelter expensive but the construction and break-in period would extend the length of time required before the cobalt can be produced and hit the markets.
Basa’s invention the Re-20X process pushes all the buttons that anyone could want. It reduces the amount of time it will take for CCW to market its cobalt. It is environmentally green, highly efficient and cost effective and scalable.
Tests at CCW’s Castle Mine pilot plant showed recoveries of 99% cobalt, 81% nickel, 84% manganese and it removed 99% of the arsenic.
CCW is a value added company and intends to market its cobalt as battery grade cobalt sulphate. At 22% cobalt sulphate hexahydrate the company’s production exceeds the technical specifications of battery producers in Asia. The company, thanks to its Re-20X process, has a revenue stream that few others produce. It can use Re-20X to reclaim battery and other metals form abandoned consumer electrics, computers, cell phones and laptops.
As matters now stand it looks as Canada Cobalt will be producing at least two out of the four battery metals now in demand, cobalt and nickel and may also be producing manganese, another battery metal. If investing in battery metals is on your radar, Canada Cobalt works may be the best in its class.
On November 12, 2018, Canada Cobalt Works (TSXV: CCW) (OTC: CCWOF,) was trading at $0.62.
This blog is written for educational purposes only. It should not be construed as investment advice. Every investor should perform their own due diligence. In the interests of transparency, Canada Cobalt Works is a client of Momentum Public Relations.
Mineralization exhibiting cobalt bloom from the first level of the Castle cobalt-silver mine in Northern Ontario. (Image: Canada Cobalt Works)