Investors are Powering Up on Cobalt Stocks as Price Hits 9-Year High
NetworkNewsWire Editorial Coverage: Cobalt is a key component of lithium-ion batteries, with cobalt sulfate the preferred feedstock for the cathodes in these batteries. During 2017, the spot price of cobalt has seen an upward trend, surging more than 120 percent on the London Metal Exchange (LME) since the beginning of the year to a nine-year high (http://nnw.fm/f38iT). Predictions are that 2018 will see growing demand for cobalt in line with the increased production of electric vehicles (EVs) worldwide and the increasing adoption of lithium-powered mobile technology in developing countries, and Bloomberg New Energy Finance forecasts that the shift toward these batteries will continue to increase, sending demand for cobalt up an astounding 30-fold by 2030 (http://nnw.fm/dArn3). Quantum Cobalt Corp. (CSE: QBOT) (FRA: 23B) (QBOT Profile) is gearing up to take advantage of this surge in demand for the metal by developing its cobalt interests in North America. With recent significant exploration results, Quantum is pacing alongside other companies looking to scale up their exploration, development and production endeavors, including Cobalt 27 Capital Corp. (TSXV: KBLT), First Cobalt Corp. (TSXV: FCC) (OTCQB: FTSSF), eCobalt Solutions Inc. (TSX: ECS) (OTC: ECSIF) and Katanga Mining Limited (TSX: KAT).
The biggest market for electric vehicles is China, where the number of EVs sold in 2016 was double the amount in Europe and triple the amount in the United States. Sales of electric vehicles are likely to increase exponentially on the back of China’s requirement that one in five cars sold by 2025 must be powered by alternatives to fossil fuels. France and Britain have also announced their intention to ban combustion engines for vehicles by 2040. As signatories to the Paris Agreement on Climate Change, more countries will follow suit, leading to an even higher expected global demand for cobalt. Lithium-ion batteries account for a third of the cost of producing an electric vehicle. To date, battery prices have made EVs cost-prohibitive, but the price fell by 35 percent in 2015 and has continued to decrease each year since. Bloomberg reported on a prediction that EVs will be as affordable as combustion-driven vehicles by 2022, and that EVs will account for over a third of all new vehicle sales by 2040 (http://nnw.fm/bc0hI).
While impressive, these predictions are saddled with worrisome controversy. Today, China generates 80 percent of the world’s cobalt products; a large percentage of its feedstock is sourced from the Democratic Republic of Congo (DRC), where more than 50 percent of the world’s cobalt is mined despite a long history of volatile political instability and serious ethical concerns. To say circumstances in the DRC are “troubling” is putting it mildly. Human rights activists and NGOs are ramping up their efforts to abolish forced labor, child labor and financial corruption concerns in the DRC, while industry leaders Apple and Tesla – both of which heavily rely on cobalt for their lithium batteries – are walking away from “Conflict Cobalt” and looking for alternatives supplies outside of the DRC (http://nnw.fm/ay9B1 http://nnw.fm/2AmMj).
Increasing global awareness also has many cobalt producers pursuing opportunities to develop safer alternatives in North America rather than risking their investments in the DRC. And herein lies the opportunity for Canada.
Well-aware of the shifting supply scene, Quantum Cobalt Corp. (CSE: QBOT) (FRA: 23B) is focusing its attention on developing its mining interests in Canada (http://nnw.fm/0uPqp), where the company owns three properties tucked into the core of Ontario’s cobalt belt.
Quantum earlier this week announced significant results from an exploration program at its wholly owned Kahuna Property near the town of Cobalt. At Kahuna, the exploration program focused on prospecting, geological mapping and geochemical sampling included 166 soil samples and 28 grab samples. According to the press release (http://nnw.fm/B4Vhp), Kahuna produced assay samples as high as 10.59 percent cobalt. Keep in mind that the discovery of 2 percent cobalt is considered “high grade” – samples at 10.59 percent put Quantum in a favorable position to consider its options to produce cobalt from the historic workings to potentially capture its share of surging demand for cobalt.
Quantum also recently published the results of assays from its exploration program at its Nipissing Lorrain mine (http://nnw.fm/2LX5n), reporting that from 28 grab samples collected and 15 submitted for analysis, the average grade at the pile was found to be over 2.33 percent cobalt, with a peak value of 8.33 percent. Based on these positive results, the company says it is considering options to produce cobalt from the historic workings.
Quantum in late November acquired the Nipissing Lorrain Project, which includes two separate claims in land packages around the mining town of Cobalt, a historically mined area with rich deposits of cobalt, nickel and silver, and easy access to infrastructure, power and road transport. Past production at this property included over 16,500 pounds of cobalt and 5,500 pounds of silver.
Located in the epicenter of past producing cobalt mines in Ontario, Quantum is gearing up to breathe life into Canada’s supply line, potentially providing investors and automakers an alternative outside the ethically-crippled DRC. With Tesla alone pushing to roll-out 500,000 electric vehicles by the year 2020 – which would require roughly 6 percent of cobalt produced worldwide annually – global demand is rapidly outpacing supply, triggering what many are calling a modern-day “exploration rush.”
Leading Quantum’s aggressive push forward is CEO Greg Burns, who has more than two decades of corporate and technical experience in mineral exploration. He is also currently the director of M&A for Capital Investment Partners, an investment bank headquartered in Western Australia. Burns previously was the previous managing director of Xenolith, which was taken over by Cline Group in 2015, and was also formerly the director of White Canyon Uranium before the company was taken over by Denison Mines in 2010. He has also held senior operations roles with Goldstream Mining, Adamus Resources Limited and Platinum Australia Limited.
With Burns at the helm, this CAD$45+ million mining company is gaining ground on its larger counterparts.
Cobalt 27 Capital Corp. (TSXV: KBLT) is one of the few pure-play companies in the cobalt sector. The company holds physical cobalt stock and is focused on developing a portfolio of revenue streams, royalties and direct interests in cobalt mineral properties through acquisitions. It has a high-quality management team and advisory board experts in the fields of mining, investment management and streaming/royalty companies. Cobalt 27 holds just over 2,160 tons of physical cobalt, consisting of 1,488 tons of premium grade and 672 tons of standard grade cobalt. It does not intend to actively speculate with its physical holdings, which are stored at secure warehouses certified by the LME. Cobalt 27 provides an investment alternative for investors interested in direct cobalt investment without the risks associated with exploration and processing companies.
With a market cap of over $232 million, First Cobalt Corp. (TSX.V: FCC) (OTCQB: FTSSF) is in the process of completing mergers with Cobalt One Ltd. and CobalTech Mining Inc., which will enable it to control over 10,000 hectares of prospective land and 50 historic mining operations around the town of Cobalt, Ontario. Currently, the company owns 4,300 hectares that include the historic Keeley-Frontier, Drummond, Silver Banner and Bellellen mines. These mines historically produced more than 3.3 million pounds of cobalt and 19.1 ounces of silver. First Cobalt’s mission is to build the largest pure-play cobalt exploration and development company in the world. On Dec. 7, 2017, the company announced that it had purchased four contiguous mining claims located near the historically producing Caswell Mine within the Cobalt Camp.
eCobalt Solutions (TSX: ECS) (OTC: ECSIF) has interests in base and precious metals, as well as uranium projects, in Canada, the United States and Mexico. It has made a conscious decision to distance itself from the risks associated with unethical mining operations in the DRC. The company has focused its cobalt efforts on its wholly owned Idaho Cobalt Project, which is one of the few predominant cobalt deposits in the world. This means that mining feasibility is unaffected by the nickel and copper markets. Engineering studies have indicated that this project has the potential to produce high-purity cobalt and is at advanced-stage, near-term production.
Katanga Mining Ltd. (TSX: KAT) is a well-established mining company that began exploring opportunities in the DRC in 1997. It operates a large-scale copper-cobalt project with substantial high-grade mineral reserves and integrated mineral processing operations. In January 2008, the company merged with Nikanor PLC and also holds a 75 percent stake in two joint ventures with Gecamines, a DRC-owned mining company. Although it conducts all its operations in the DRC, Katanga Mining is fully committed to the socio-economic development of the community within its sphere of influence.
Due to the surge in demand for cobalt and expectations for a continuing trend, industry experts predict a looming cobalt deficit, which would likely push the price of the metal even higher. These companies are scaling up their efforts in exploration and development to take advantage of this rising global demand.
For more information on Quantum Cobalt Corp., visit: Quantum Cobalt Corp. (CSE: QBOT) (FRA: 23B)
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