Reserve estimate calculation for LiCo Energy Metals.
Teledyne Property
Quote from latest PR: "Based on the surface and underground diamond drill programs, historical reserves of 60,000 tons in the geologically inferred category, and 40,000 tons in the probable category, at an average grade of 0.45% Co, 0.6 oz/t Ag was estimated (Linn, 1983)."
Facts:
- LiCo does not state that these historical reserves are 100,000 tons of 100% pure Cobalt
- The 100,000 tons are “mineable quantities consisting of an average of 0,45% Cobalt”
- LiCo does not specify whether the projected reserves are Metric tons (1 T = 1000kg) or Short tons (1 T = 907 kg)
- Conversion rate 1 USD = 1,28 CAD
- Cobalt LME = 84,000 USD/T
- Average grade of 0,45% = 0,0045
--> Calculation (assumption 1T = 1000 kg):
- # tons pure Cobalt = 100,000 T * 0,0045 = 450 tons of 100% Cobalt
- # USD worth of pure Cobalt = 450 * 84,000 = 37,800,000 USD
- # CAD worth of pure Cobalt = 37,800,000 USD * 1,28 = 48,384,000 CAD
--> Calculation (assumption 1T = 907 kg):
- # tons pure Cobalt = 100,000 T * 0,0045 * 0,907 = 408,15 tons of 100% Cobalt
- # USD worth of pure Cobalt = 408,15 * 84,000 = 34,284,600 USD
- # CAD worth of pure Cobalt = 34,284,600 USD * 1,28 = 43,884,288 CAD
Bucke property
I did not find any projections of historical reserves for this property, which make calculation somewhat more challenging. Please share in case you know more concerning this. The calculation can be done in analogy of my projection for the Teledyne property.
Summary:
- Based on these calculations LiCo's (historical) reserves are currently worth in the tens of millions.
- Cobalt LME has increased nicely in the past 2 years. Projections for 2020 is an increase to 100,000 USD/T.
- The 0,45% Co grade is based on historical reports. Based on the recent measurements in the field the real grade appears to be higher. Please note that every 0,10% CO increase (vs the historical 0,45% Co, at current conditions for Cobalt LME and for Metric Tons) is worth an additional 10,750,000 CAD for the In-Situ value.
- These calculations completely ignore the fact that the recent measurements have shown some decent Cu (Copper LME = 6800 USD/T) & Pb (Lead LME = 2350 USD/T) concentrations. Both are present and will contribute positively to the total In-Situ valuation.
- The Teledyne property is adjacent to the former Agaunico Mine, which is next Cobalt known for its Silver presence. This estimate too totally ignores any value for possible Silver concentrations. Reason for ignoring is that I've found too less signs (and hard data) to even consider this to contribute to the In-Situ value. Future will tell if my exclusion is/was correct.
Conclusion (don't fall of you chair when reading this shocking end result):
- There is value in the Teledyne & Bucke properties but LiCo has not yet demonstrated the 100M CAD In-Situ value
- Let's go with Phase 2 because this will be of KEY importance for the company (and us small investors)
- DATA IS KING, all the rest is speculation
GLTA
