Quarterly Activities & Cash Flow Reports March 2017
March 2017 - Highlights
- Assays Confirm Thackaringa as a significant Cobalt-Pyrite Project.
- Diamond and RC drilling campaign concluded, further drill assays and Scoping Study work underway.
- Second round of drill results being processed, expect market release early May 2017.
- Market demand forecasts show increasing cobalt market deficit, 9% CAGR demand growth to 2020F with Electric Vehicle (EV) battery demand the key driver.
- Cobalt Blue Holdings Limited listed successfully 2 February 2017.
- Options vesting date 2 May 2017. COB will then apply for ASX quotation, expected on or about 9 May 2017.
- Conditions fulfilled to receive 51% of beneficial interest of Thackaringa Leases (EL6622, EL8143, ML86, ML87) to Cobalt Blue Holdings. This receipt is subject to retention clauses, detailed in this release.
- Completion of successful China visit.
Thackaringa Cobalt - Broken Hill NSW
Cobalt Blue Holdings Limited (ASX:COB) reported significant and encouraging cobalt assays from our drilling program commenced in November 2016 at the Thackaringa project near Broken Hill, NSW. The results were reported 27 March 2017 and reinforce the substantial cobalt and pyrite development opportunity at Thackaringa. Drilling was commenced by Broken Hill Prospecting Limited (ASX:BPL) which retains a participating interest in the project.
- Assays from our 2016 Diamond Drilling program confirm continuity and tenor of cobalt-pyrite mineralisation at Railway, Pyrite Hill and Big Hill deposits.
- The Diamond Drilling program provided representative material for planned metallurgical testwork that commenced in March.
- A significant Reverse Circulation (RC) drilling program (commenced in February 2017) designed to expand and upgrade existing Thackaringa Mineral Resources is complete.
The Thackaringa project is located within the Broken Hill Block of the Curnamona Province and is composed of Willyama Supergroup high grade regional metamorphic gneisses, schists and amphibolites. Within the project area the local geology is dominated by quartz-albite-biotite gneiss, quartz-albite gneiss, and amphibolite dykes. The extensive stratabound cobalt-pyrite mineralisation at each deposit (Pyrite Hill, Big Hill and Railway) is hosted by quartz-albite gneiss.
- At Railway, assays confirm broad intersections of high-grade mineralisation with potential to add to the existing resource.
Mineralised intercepts include:
a. Drillhole 16DM05 - 48m @ 1,045ppm Co from 30m
b. Drillhole 16DM06 - 42m @ 1,615ppm Co from 28m
c. Drillhole 16DM07 - 25m @ 1,232 ppm Co from 35m and 26m @ 1,456 ppm Co from 71m
d. Drillhole 16DM08 - 4m @ 1,301ppm Co from 57m and 19m @ 1,221ppm Co from 76m
- At Pyrite Hill mineralised intercepts include:
a. Drillhole 16DM01 - 52m @ 840ppm Co from 95m including 7m @ 1,111ppm Co from 96m
b. Drillhole 16DM02 - 23m @ 1,392ppm Co from 127m
Mineralisation at the three deposits has a combined strike length of 4.5 kilometres with widths varying from 25 metres to 100 metres. The increased thickness is typically due to the extensive development of tight isoclinal folding within the pyritic horizon. The 2016 drilling program comprised eight fully-cored diamond drill holes at three locations - Pyrite Hill, Big Hill and Railway (Figure 1, see link below).
The work was undertaken primarily to provide sufficient material to undertake meaningful metallurgical test work. By twinning previous RC holes the JV was able to confirm the tenor of mineralisation and compare the assays and sampling protocols for historical RC percussion drilling vs diamond drilling. All 2016 holes were drilled at inclinations between 45 and 60 degrees into the steeply-dipping host lithology.
A total Inferred Mineral Resource of 33.1Mt at 833ppm cobalt (at a 500ppm Co cut-off) has previously been estimated for Thackaringa (reference COB Replacement Prospectus released 31 January 2017).
The now completed 2017 drilling program comprised approximately 4,675m of RC drilling plus 1,797m of diamond drilling. The program is designed to extend the drilling coverage and improve drilling density in support of future Mineral Resource estimations, replace some of the historical drilling for QA/QC purposes and provide material for further metallurgical testwork.
COB's activities have related to exploration, there have been no activities relating to production or development.
A summary of the expenditure incurred on exploration activities during the quarter can be seen in the Table below (refer to link below).
Our schedule of work is shown below (refer to link below). Looking forward, we will be delivering a Preliminary Feasibility Study by mid-2018 and a full Bankable Feasibility Study by mid-2019.
Drilling has now concluded under Stage One of COB's developmental milestones. Preparation and assaying of the substantial Stage One drilling program continues. We expect to release a second round of drilling results in early May 2017.
In conjunction with this work, significant technical studies are being undertaken as part of our Scoping Study commitments, to be finalised mid-year.
The Global Cobalt Market
The following section has been included with permission from Hillcrest Consulting, a global cobalt commodity consulting service.
The global cobalt market is characterised by low supply coupled with high demand growth that will drive long dated price strength.
- 9% demand CAGR to 2020 - Electric Vehicle battery demand the initial driver.
- 3% supply CAGR to 2020 - Cobalt prices have little influence on primary producers' decision-making as most cobalt is a by-product of either nickel or copper production. Mounting evidence exists to suggest that new nickel and copper supply growth is cobalt constrained.
- 2017 marks the beginning of a sustained price rally, set to revisit previous cyclical highs, forecast to hit US$80,000 per tonne by 2020F - refer to Figure 3 below. However, not all battery materials are the same, as the lithium price is forecast to weaken.
Cobalt Blue Holdings Limited listed successfully on the Australian Securities Exchange (ASX) - 2 February 2017.
Participating IPO shareholders received 12.5 million free attaching Loyalty Options on a 1:4 basis.
As part of an in-specie distribution, Broken Hill Prospecting Ltd (BPL) shareholders received 8.75 million free Bonus Options (also on a 1:4 basis).
The Loyalty and Bonus options will vest on 2 May 2017 (three months after COB's ASX listing). COB will then apply for ASX quotation, expected on or about 9 May 2017.
Further details of the In-Specie Distribution, Bonus Options and Loyalty Options may be found in Sections 2.1, 2.2 & 2.3 of the COB Replacement Prospectus dated 3 January 2017 (Replacement Prospectus) - supplemented by the supplementary prospectus dated 10 January 2017 (Supplementary Prospectus), copies of which may be found at www.cobaltblueholdings.com.
Conditions fulfilled to receive 51% of economic interests of Thackaringa Leases to Cobalt Blue Conditions have been fulfilled (Exploration Farmin Joint Venture Agreement Clause 3.1(a) & 3.1(b)) to receive 51% of beneficial interest of the Thackaringa Project to Cobalt Blue Holdings. Cobalt Blue notes the interest must be retained under Clause 3.1(d), reprinted below:
Exploration Farm-in Joint Venture Agreement (Broken Hill Prospecting Ltd and Cobalt Blue Holdings Ltd) - Clause 3.1(d) In order for COB to retain the Stage 1 Percentage Share received in accordance with clause 3.1(b), then during the period commencing on the Commencement Date and ending no later than 30 June 2017 (Stage 1 Earning Period), COB must:
1. Complete an Exploration program of works within the JV Area (with a minimum 'in ground' expenditure of AUD 2 million (inclusive of GST and in addition to the Execution Payment)) which is sufficient to define an Inferred Mineral Resource of 100 Mt (to JORC 2012 standards), and give a notice to BHPL verifying the amount of Expenditure that COB has incurred on Exploration in the JV Area; and
2. Complete a Scoping Study (to JORC 2012 standards).
Please note: The tenement holdings described at the conclusion of this release do not show this interest as the satisfying conditions were met after the end of the quarter.
Completion of Successful China Visit
CEO Joe Kaderavek and Chair Robert Biancardi recently (4-8 April) completed a commercial/technical visit to China. They travelled extensively across four provinces, visiting companies responsible for over 80% of Chinese cobalt capacity. China processes approximately 50% of the world's cobalt and has long dated experience with cobalt extraction and technical expertise require to make cathodes (cobalt containing electrodes found in lithium-ion batteries).
COB management believes there are enormous benefits to co-operation, for example deploying best in class technologies to achieve high yield, low cost extraction processes. The team were very impressed by Chinese research and development efforts, particularly focussed upon cobalt salt production from sulphide materials (such as Cobalt Blue). Further, plant design and state of the art process control allow for efficient processing of very high material volumes.
From their viewpoint, Chinese refineries are looking for diversification away from an increasing dependency on sourcing cobalt from the African copper belt. The collective view was that current pricing (approx. US$25/lb) was sustainable, with all industry participants making a good margin. However, further upward price pressure may cause battery makers to "thrift" and use lower cobalt content cathodes in response.
Looking forward, we would like our shareholders to keep in touch with COB updates and related news items, which we will post on our website, the ASX announcements platform, as well as social media such as Facebook and LinkedIn (see respective links below). Please don't hesitate to join the 'COB friends' on social media and also to join our newsletter mailing list at our website.
To view the full Quarterly Report, please visit: http://abnnewswire.net/lnk/9G43OE8O
About Cobalt Blue Holdings Limited
Cobalt Blue Holdings Ltd (ASX:COB) is an exploration company focussed on green energy technology and a strategy of fast-tracking development of the Thackaringa Cobalt Project in New South Wales to achieve commercial production of cobalt. This strategic metal is in strong demand for new generation batteries, particularly lithium-ion batteries now widely used in clean energy systems.
COB has entered into a farm-in joint venture agreement with Broken Hill Prospecting Limited (“BPL”) in which COB seeks to acquire an initial 51% interest in the Thackaringa Cobalt Project. COB will undertake exploration and development programs on the Thackaringa Cobalt Project and, subject to the achievement of milestones, will acquire 100% of the Thackaringa Cobalt Project.
Cobalt Blue Holdings Limited