At the Mines and Money Show, held in New York City in early May, some of the smartest investors in the room were excited about battery metals, especially cobalt, lithium, and graphite.
Cobalt, in particular, is seeing a huge uptick in pricing (from $10 to $26 per pound over the course of eight months) and attracting top private equity groups, so I’m going to focus on it here. Currently, demand for cobalt is soaring and supply is not able to keep up. This demand is due to the appetite for lithium-ion batteries, as evidenced by the rise of many “gigafactories” (enormous battery plants) worldwide. In fact, with Tesla (NASDAQ:TSLA) poised to launch their Model 3 (anticipated to have broad market appeal), the demand for cobalt from Tesla alone could have a ripple effect on the entire junior cobalt sector.
Also important to note, is that the majority of our current cobalt supply is mined in the Democratic Republic of Congo, in Africa. Not only does this make the supply chain precarious, but this region of the world is known to rely on child slave labor in its mines. So, through the development of North American sources for cobalt, we can strengthen the cobalt supply chain and reduce the practice of child labor.
In the race to develop a stable and ethical North American source for cobalt, there is one Canadian story that is drawing attention. Cobalt Power Group Inc (OTC:CBBWF) is a Vancouver-based firm with one of the most advanced exploration projects in the Cobalt, Ontario region with the aim of becoming among the first junior cobalt players to get to production.
Cobalt Power has been early in picking up cobalt properties in Ontario before cobalt made its major move. With the cobalt industry in the US and Canada still in the initial stages, Cobalt Power’s early entrant status is a significant advantage.
Located about five hours north of Toronto, Ontario, Cobalt Power’s Smith Cobalt asset is far from green-field exploration. Instead, the project is located next to a past silver producer, Agnico’s Deer Horn mine, in a region where silver is closely associated with cobalt and, some reports indicate, at very high grades. The existence of infrastructure (there are several mine shafts on the Smith Cobalt property) and historical maps helped to identify targets for their drilling program that is set to commence this spring. Management appears confident they can hit cobalt mineralization.
Once they confirm the location of the veins, they can start extending them to show continuity. Hopefully they encounter multiple vein systems, essential for the publication of an initial NI 43-101 Resource Report and for an economically viable mining operation.
Cobalt Power has less than 70 million shares outstanding and their market cap is micro at under six million.
I spoke with Dr. Andreas Rompel, President & CEO of Cobalt Power Group, who is a PhD geologist with years of production experience with Anglo American (LON:AAL) and Hochschild. Dr. Rompel’s expertise in mining of deep and narrow veins in Peru and Mexico is ideal, as their Smith Cobalt project sits on an old mine with similar characteristics to those veins in South America.
Dr. Rompel has more than 28 years of experience in the industry in many capacities, most recently, as President & CEO of Cobalt Power Group. Having worked in numerous countries around the world, Dr. Rompel is multilingual and brings an impressive variety of management skills to the table.
Disclosure: I own securities in Cobalt Power and the company is a website sponsor. That means I have been compensated and I am biased as I may benefit from an increase in share price. I may buy or sell at anytime. This article and interview contains forward looking statements which may not come to fruition as small cap mining stocks are risky. Please do your own due diligence and consult a financial advisor. This is not financial advice and should only be seen as an advertorial.
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