Recent article from African Business Journal:
Championing cobalt in Cameroon
When TABJ spoke with Geovic Mining Corporation’s CEO, Jack Sherborne, in July 2009, he was hopeful that cobalt would be “a star performer of the 21st century,” in which case the company was well-positioned to capitalize.
We asked if this was still the case, and Sherborne’s answer was a resounding “yes.”
“It’s clear the internal combustion engine isn’t going to be the primary global transportation solution of the future,” he states. “There is a major shift underway toward hybrid and electric-only vehicles that use rechargeable batteries. There is a lot of cobalt in these batteries, which will power the cars of the future. Thus, it appears likely that cobalt will be a very important industrial element for decades to come.”
Work at Geovic’s Nkamouna cobalt project in Cameroon is coming along very well and, although Sherborne says you can “never make as much progress as you’d like,” progress over the past year speaks for itself. From approaching completion of the final feasibility study, to working toward securing financial backing, to preparing to commence construction, we have a lot to catch up on with the company committed to putting Cameroon on the global mining map.
Updating Nkamouna feasibility study
In late 2009, Geovic hired Lycopodium Minerals Pty. of Perth, Australia to update the Nkamouna Feasibility Study. This update commenced in January of this year, and “is expected to be completed in the fourth quarter, which we are very much looking forward to,” Sherborne says.
“Moreover, in late 2009 we also engaged Standard Chartered Bank of London, UK, to be our financial advisor, to help us with all the issues related to financing the project.”
Standard Chartered, which has a long, storied history working with African mining projects, is providing a myriad of advisory services, particularly regarding the potential for off-take agreements with Asian industrial companies, as well as financing arrangements that could be tied to them. The updates to the Feasibility Study incorporate numerous changes Geovic has made to project chemistry and processing, as well as other streamlining efforts to improve overall efficiency and reduce project risk. Geovic announced a 97 per cent increase in Nkamouna’s Measured & Indicated Resources in late 2009, and accordingly will incorporate this data into the Final Feasibility Study.
“Those results, some of which have already been published, have extended the project’s resources considerably,” Sherborne says.
“The updated reserves will certainly be more substantial than they were before, although we really aren’t lacking for material to put through the processing plant. Nevertheless, they look much more attractive from the standpoint that with a bigger reserve base, we can be more selective earlier on, running higher grade material through the processing plant and thus materially improving project economics.”
The updates have also allowed the company to plan for operation over many more years, offering greater project flexibility.
Regarding the Lycopodium project update, “mostly they’re incorporating the pilot plant test work performed this summer by Hazen Research, also based here in Colorado,” Sherborne says.
“They’re still performing those tests, but for the most part it’s done, at least to the extent that Lycopodium has started work on the engineering aspects of the Project.”
With Geovic’s efforts moving full-steam ahead on all fronts, there is, of course, a looming milestone that will signify the next stage for Nkamouna.
Considering construction
“That’s always the question people want to know—when will construction start?” Sherborne says, pointing out that however many targets you set, there are always going to be unplanned surprises that try to thwart your timeline.
“Nonetheless, we aim to commence some limited construction activity before the end of this year,” he says. “However, major construction will probably have to wait until the first half of 2011, once we can get project financing completed.”
In addition to firming up off-take agreements, which Sherborne highlights as being “absolutely essential to the project,” Geovic is looking forward to initiating mining in Cameroon.
“They’ve never had a mining industry. They’ve got substantial resources in the country, particularly bauxite and iron ore, and thus are very enthusiastic about attracting foreign investment to develop these projects. Our modest-sized mining project is leading the way,” he says.
“We’re extremely enthusiastic to get started, as is the state investment corporation (SNI, which controls 39.5 per cent), and hopefully we’ll be able to do so in the very near future.”
It is important to differentiate between mining for cobalt and other metals such as gold, iron ore, and copper. Sherborne explains that unlike those projects, where you mine as much ore as you can profitably handle, cobalt is an altogether different animal. Geovic has to be exceptionally aware of global supply/demand dynamics, as more than 90 per cent of the world’s cobalt is mined as a by-product to nickel and copper mines from a variety of geographic regions such as the Democratic Republic of Congo.
“Those mines are not driven by the cobalt market per se. However, we will be a primary producer, so we can work together with consumers to make sure we produce at a rate consistent with market demand—and that’s a lot trickier than just producing at whatever rate suits us,” he says.
“That’s a key aspect in advancing this project; trying to obtain off-take agreements that recognize the nuances of the (roughly 60,000 tonne/year) cobalt market.”
Geovic recognizes this extremely well. So well, in fact, that numerous trading and industrial companies have started to pay due attention to their work at Nkamouna, opening new possibilities for financing, off-take agreements, and beyond.
Cobalt, Cameroon and construction
By year end, Geovic expects to have completed the updated Feasibility Study, and there are plenty of people watching for the results.
“We’ve had a lot of discussions with companies from the Far East related to off-take agreements, and some of those discussions tie in financing schemes as well. There’s a lot of interest amongst the major companies from China, Korea, and Japan,” Sherborne says. Moreover, “most all of these companies are keen to purchase the nickel and manganese we will be producing as by-products as well.”
These companies tend to be scouting out long-term mineral supplies and, perhaps, we ask, will we see project financing and/or off-take announcements in due course?
“It’s not inconceivable that we’ll have something useful to tell you about these discussions in the next few months,” Sherborne says.
Separately, Geovic has taken great strides with its political and humanitarian partnerships over the past decade, and as a result it is not surprising to see that its work with the Government of Cameroon continues to impress.
“Often working with government entities on mining projects is a daunting endeavour. We have had our ups and downs, but are becoming much better at getting along,” Sherborne says. “[Better] to the point, both partners understand that Nkamouna can be advanced in both of our interests when we share a common vision. They’ve taken the time to thoroughly understand what we’re doing, and actually get involved in helping us.”
With a nod to the New Caledonia Heavy Mineral Sands project that Geovic is currently putting together, set to hit news wires in the coming months, and a deep breath as we consider how promising Nkamouna is currently looking, one year on it looks like Geovic is stronger than ever. Its work with Lycopodium and Standard Chartered Bank, its understanding of the cobalt market, the updated reserves, international attention to the exploding market for hybrid and electric-only vehicles, and a quest to advance mining in Cameroon are all stellar signs that this is the cobalt miner to watch.
AI
