We are adding another stock to our cobalt basket today, Cobalt Power Group (TSX: CPO.V). Stock Syndicate recently featured two other Canadian cobalt players, Castle Silver Resources (CSR.V) and CobalTech (CSK.V), and the excitement around this metal continues to brew as the juniors edge into place to become part of the supply chain. Only a year ago cobalt was $10.52/lb. At the time of writing, cobalt is priced at $25.17/lb.
Renewable energy demand combined with a volatile supply chain for cobalt is sending prices skyward to new levels, with some analysts expecting a 900 tonne deficit this year. Recent cobalt headlines detail the metal’s sobering issues, and speak to the case for strong demand going forward, plus a mandate for “conflict free”, North American sourced cobalt. Juniors are stepping up to this plate.
The name cobalt comes from the German word ‘kobald’, meaning goblin. Cobalt is used in mobile phones, electric cars, super alloys and magnetic steels. Cobalt, with a melting point of 2,723 degrees Fahrenheit, is known for its use as a super-alloy in jet engines and has now been popularized from its use in lithium-ion batteries in electric cars and phones.
Around 98% cobalt is produced as a by-product of nickel (60%) and copper (38%)
The Democratic Republic of Congo is the world’s largest cobalt supplier (55%-64%), but conflict and dispute over land, resources and forced labour are shifting the focus for future supply outside of the DRC to more stable jurisdictions
Demand for lithium-ion batteries will grow from 70 GWh in 2016 to 170 GWh by 2020, with “cobalt-containing cathodes accounting for 81% of the market”
A couple stealth funds (Pala Investments and Shanghai Chaos Investment) are actually stockpiling cobalt
According to Visual Capitalist’s Jeff Desjardins “Ontario is one of the only places in the world where cobalt-primary mines have existed.” The town of Cobalt Ontario is called the “cradle of Canada’s mining industry” after silver was discovered in 1903 at a station called “Cobalt” during the construction of the Temiskaming and Northern Ontario Railway. The Cobalt silver boom brought prospecting attention, financing interest and eventually mining infrastructure that supported over 100 mines in the area. Skills were developed, technical advances and discoveries were made, and Toronto eventually became known worldwide as a centre for mining finance.
Agnico Eagle recently pledged $1 million to the Cobalt Legacy Fund aimed at preserving the history and cultural heritage of the area. Agnico’s CEO commented “Cobalt is the foundation of our Company and as many of our former silver division employees remain in the region, they will continue to benefit from the preservation of these important cultural and community organizations.”
Cobalt has street names like Silver Street, Prospect Ave, Galena St, Nickle Street, and Nippissing Road, and it is putting Ontario’s friendly mining scene forefront, yet again. Between 1903 and 1966, the area produced over 750 million ounces of silver and over 50 million pounds of cobalt. It’s rather amazing that the town is coming to life on the back of cobalt, when it could have been just as likely to be the high grade shine from silver in the jurisdiction that is attracting finance to this prime area. If the price of silver does travel back up to the levels enjoyed in 2011, look out.
Cobalt Power Group Preps to Begin Drilling
Cobalt Power Group (TSX.V: CPO) has 51 million shares out and a market cap of around $5 million, so it’s looking really, extremely cheap right now, in light of the fact that they will have drills turning shortly. Cobalt Power is exploring in Canada’s proven silver cobalt district in Ontario, an area their technical team knows all too well.
The Smith Cobalt project, Cobalt Power’s flagship, is 370km northwest of Ottawa, near the Ontario/Quebec border. The property is beside the historic Deer Horn mine, also known as the Cross Lake O’Brien mine. The mine produced around 11 million ounces of silver and 100,000 pounds of cobalt up to the mid 1960’s.
What makes Smith particularly interesting is that several of these Ag-Co producing veins from Deer Horn extend onto the Smith property, and the sampling grades they have returned recently are spectacular, here and here. Cobalt Power knows that Smith has at minimum 4 veins, and they are concentrating their IP, aeromag and upcoming drill programs on identifying vein swarms and vein extensions “if Mother Nature cooperates”, commented Jevin Werbes, Chairman of Cobalt Power.
“Agnico mined Deer Horn’s high grade ‘vein 19’ four hundred feet below our known workings at Smith Cobalt. Deer Horn is contiguous with our property and we have a lot of historical data from the underground workings that lead us to believe there could be more veins to discover. Now that winter is over, we are preparing to drill around 10 holes, 1800 meters total. We are ahead of the game and to my knowledge we are the only company out there about to drill.”
All the necessary components of accepted geological models for cobalt-silver have been identified on the Smith property, which recently expanded past 2,000 acres. The Smith Cobalt portion of the property is patented land, they own the minerals rights and the surface rights as well. This area has been under-explored, especially considering its historical significance for Canada’s mining scene. This doesn’t guarantee success in any way shape or form, but for an area play it bodes well this summer and fall when results will start to trickle in. As the saying goes, “the best place to find a mine is near a mine.”
Andreas Rompel is the President & CEO of Cobalt Power Group. He has a PHD in Structural Geology, M.Sc. in Geology Palaeontology and a Diploma in Investment in Mining Projects. He was formerly Manager of Geoscience Services with Anglo American, and Corporate Business Development Manager and the Country Manager of Exploration (Mexico) for Hochschild. He has major talent on his resume. His experience in the mining and exploration industry spans almost three decades, where he has paved the way for financing and developing a potentially great project.
Mr. Rompel is a leading expert in structural geology, a fitting leader for a project with narrow veins. Mr. Rompel and his VP of Ex Mr. Chris Healey will ensure the company spends the money in the ground, and does the target definition work to increase the chances of success. Mr. Healey is a P. Geo with 48 years of experience in this business. He’s worked at resource projects that range from exploration to production. He began his career with International Nickel Company and then went on to work for Cameco Corporation. He was also President & CEO of Titan Uranium Inc., a tier 1 TSX company where he oversaw the permitting of a major mine and mineral recovery facility. He’s had the glory, he’s experienced the headaches, end to end of the biz.
And last but not least, the company’s board is chaired by Mr. Jevin Werbes, a capital market’s professional with 20 years of practical experience in the mineral exploration and corporate finance securities industry and investor relations. He is the former President & CEO of Ansell Capital Corp, and current President and CEO of Carmax Mining Corp.
First to Drill
Cobalt Power just might be the first junior to drill test Canada’s “silver sidewalk” this season so all eyes will be on them when they publish drill results. The strategy is to concentrate first on verifying the historical data and then do a few step out drill holes, so initial assays could really knock some socks off. Besides confirming the known veins and strike length potential, they also want to confirm values from their excellent muck pile sampling from January. The pile is around 50m X 20m, with anywhere between 5,000-10,000 tonnes of crushed rock. Samples returned an encouraging average of 0.5% cobalt from the pile.
Two rock samples were also taken from a vein that was uncovered while clearing vegetation around a shaft, returning 7.85% Co and 118 g/t Ag, and 3.77% Co and 60.2 g/t Ag, for an average of 5.81% Co and 89.1 g/t Ag for the 2 rocks.
This is not first nations ground, but the team has consulted with local first nations, and without issue received the head nod to go ahead with their programs.
CPO has around $750,000 in cash and another $480,000 in flow through which will cover phase 1 drilling, and that doesn’t include 3.8 million warrants in the money that could come into the coffers, which expire May 1, 2017. The flow through allows phase 1 drilling to complete and get them into phase 2 follow up as well. The first program should take around 4-6 weeks to complete.
Where There is History…
Does Agnico’s old flagship mine, the Deer Horn, hint that these veins are going to multiply? Does the technical team’s theory that deeper vein swarms might be coming up towards the Smith workings provide some blue sky? Absolutely, especially at a market cap less than $10 mill. Logistically, CPO could not ask for a better setting, better infrastructure or a more mining-friendly area. And with cobalt’s newfound celebrity, the wind is at the back of this one.
CPO is gobbling up other historically intriguing cobalt properties as well to increase the chances of success when it comes time to drill. They announced late March the addition of the Bende and Kingston cobalt prospects, nice complements to the Smith property. Bende and Kingston have historical workings and mapped data that allow the tech team to proceed quickly towards target generation. Both assets come together to present low risk exploration targets which can be advanced in a relatively short period of time. They have 100% interest in all of their properties including the Proteus and Kirk Lake projects.
Take a scroll through CPO’s media here and make sure to check out their PPT at that link as well.
Majors and mid tiers are going to start watching this next phase of work in the Cobalt area closely, some are going to open their checkbooks early to ensure they have deals in place with those cobalt explorers delivering the goods. Others are going to sit back and wait for the juniors to consolidate, but either way, we see a lot of potential for these companies, and CPO in particular, to go the right way.
We anxiously await the arrival of the truth machine and we will stay with the Cobalt Power Group story to see if they hit the wire with the first set of drill results in Canada’s cobalt cradle!
This is not in any way investment advice nor any sort of stock recommendation. Please do your own due diligence and talk to a qualified investment advisor.
The contents of this article are for informational purposes only. Nothing in this article, in any way whatsoever, should be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. Note the inherent risks when investing in microcap stocks. Prior to making any investment decision, we recommend that you seek outside advice from a qualified and registered investment advisor.
Cobalt Power Group is not a client nor an advertiser. One or more of the Stock Syndicate owners does own shares in Cobalt Power Group.