A More Stable African Cobalt Supply

 

At the end of summer, Core Consultants will release a major cobalt market study that has been underway for almost two months.

The study utilises Core’s connections to sub-Saharan Africa to reveal current production in great detail, particularly that of the DRC.


Major companies have begun negotiating long-term supplies of cobalt directly from miners, seeking to ensure sufficient stocks amid industry fears of a shortage driven by the electric vehicle boom. The price of cobalt has more than tripled in the past 18 months to trade around $83,000/tonne, and while two-thirds of supplies come from the 
Democratic Republic of Congo, investors remain cautious of the nation’s history of unrest and potentially unethical practises in the mining sector, creating opportunity for projects in more politically stable jurisdictions to meet rising demand.

In December, ASX-listed Celsius Resources Limited (ASX: CLA) completed a drilling program spanning more than 17,000 metres and almost a hundred holes at its Opuwo Cobalt Project in Namibia. Opuwo is hosted in the Dolomite Ore Formation (DOF) within Neoproterozoic sediments of the Kaoko Belt in northern Namibia. Kaoko is considered by some as the western extension of the geological structure known as the Central African Copper belt, which contains 40% of the world’s cobalt and 50% of its copper.

Celsius has a 95% interest in Opuwo, which spans a massive 1,500 square kilometres. Highly encouraging assay and metallurgical results have been flowing in throughout February, demonstrating a very large and consistent mineralised system. The company has confirmed mineralisation in a zone of more than 15km with strong potential for adjacent and parallel systems. The company has calculated an initial target of 33-41Mt grading 0.13-0.17% Co and 0.45-0.65% Cu over an 11km zone down to depths of 150-250m.

Highlights from these latest assays include:

  • 10 m @ 0.13% Co and 0.45% Cu
  • 7.49 m @ 0.14% Co and 0.79% Cu, including 5 m @ 0.15% Co and 1.01% Cu
  • 6.66 m @ 0.12% Co and 0.50% Cu, AND 2.13 m @ 0.15% Co
  • 6.30 m @ 0.12% Co and 0.57% Cu
  • 5 m @ 0.14% Co and 0.81% Cu
  • 5 m @ 0.14% Co and 0.56% Cu
  • 5 m @ 0.13% Co and 0.72% Cu
  • 6.08 m @ 0.10% Co and 0.58% Cu
  • 4 m @ 0.15% Co and 0.59% Cu

Celsius reports closed circuit floatation recoveries of 80% at a concentrate grade of up to 1.5% cobalt are possible, as well as leach extractions of over 95% cobalt and 94% copper. Additionally, the site’s simple mineralogy was confirmed; cobalt is present as linnaeite and copper as chalcopyrite (significantly lower Capex and Opex) when compared to laterite or cobaltite operations). Mineralisation remains open along strike and at depth and has been extended by approximately 600 m to the west during this phase of exploration.

The remaining assay results are expected shortly, followed by a maiden JORC resource in March, but the data so far confirm that the mineralisation is amenable to very good extractions of the two major value metals. High leach extraction of both cobalt and copper in a sulfuric acid medium has suggested that the classical processes of copper solvent extraction and electrowinning, as well as cobalt sulfate crystallisation, can be employed to produce saleable products at a modest leach temperature of 115 degrees Celsius, at relatively low total pressures of below 1.0 Mpa(g).

Were the project to come through with a decent mine life, we note very good prospects since it has excellent access to transport and power, as well as proximity to the Walvis Bay port facilities. The company is currently well funded for near-term exploration works with circa $4.3 million in cash as at 31 December 2017, following a $3.94 million placement in October to institutional and professional investors at $0.055 per share.

Around 74% of the value of Celsius’s project is in its cobalt content, with the remainder in copper. This is unusually biased towards cobalt (the vast majority of cobalt production is a by-product of copper and nickel mining) giving Celsius far greater exposure to cobalt than many of its competitors during a time of high pricing, and the fact this isn’t a pure-play offers some security against cobalt price corrections in the future. In Core Consultants’ opinion, Opuwo is one of the most prospective new cobalt projects in Africa.

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Note: the author does not have any financial interest in Celsius Resources Limited.

This article is for information purposes only. The information contained has been compiled from sources believed to be reliable. Whilst every effort has been made to ensure that the information is correct and that the views are sound, Core Consultants cannot be made liable for any loss, no matter how it may arise. 

Certain statements contained in this website constitute forward-looking statements. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from actual future forecasts. Investors are cautioned not to place undue reliance on these forward-looking statements. 

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