Blue sky at Thackaringa

MARKET newcomer Cobalt Blue will deliver a scoping study for its Thackaringa project next month as it aims to become one of Australia’s only pure-play cobalt producers.
Blue sky at Thackaringa Blue sky at Thackaringa Blue sky at Thackaringa Blue sky at Thackaringa Blue sky at Thackaringa

Kristie Batten

Cobalt Blue, in joint venture with Broken Hill Prospecting, holds the Thackaringa cobalt project near Broken Hill, which one of very few primary cobalt orebodies.

CEO Joe Kaderavek told MNN that the company’s efforts at Thackaringa this year represented one of the largest cobalt exploration commitments on the ASX.

After 1485m of diamond drilling was completed last year, 1797m, as well as 4675m of reverse circulation drilling, has already been completed so far this year.

The aim is to complete 8000m of drilling this year.

“We’re hitting this in a very accelerated fashion,” Kaderavek told MNN.

By June 30, Cobalt Blue is aiming to have spent A$2 million in the ground and deliver a scoping study.

Thackaringa already has a resource of 33.1 million tonnes at 833 parts per million cobalt for 27,500 tonnes of contained cobalt across three deposits.

It has an exploration target of 40.3-66Mt at 600-900ppm cobalt.

Drilling results reported this morning, the final from the phase one program, exceeded the company’s expectations.

Results included 84m at 1013ppm cobalt, 15.6% iron and 12.8% sulphur from 19m at Railway Trend; and 14m at 1436ppm cobalt, 12.3% iron and 12.1% sulphur from 68m at Pyrite Hill.

A “significant” resource upgrade is due in early June.

The scoping study will look at three production scenarios, 1Mt per annum, 5Mtpa and 10Mtpa.

The base case is 5Mtpa which equates to annual production of just over 4000tpa of contained cobalt.

Cobalt Blue has mapped out a very clear pathway to production.

Over the 2018 financial year, it plans to spend another $2.5 million, get the resource to indicated status and deliver a prefeasibility study.

Expenditure in the 2019 financial year will ramp up to $5 million to deliver a measured resource and define reserves, as well as deliver a bankable feasibility study and project approvals.

“We’ll be aiming for a reserve that will support a top 10 mining operation with a 20-year life,” Kaderavek said.

The company expects Thackaringa to be a low-cost operation given its proximity to Broken Hill (25km) and the rail line to Port Pirie (only 500m from the project), plus available power, water and workforce.

Kaderavek said technology would also contribute to low costs, with 21st century ore sorting technology to be applied.

“We can sort ore at only $2-3 per tonne,” he said.

Cobalt Blue has earned an initial 51% of Thackaringa, but can get to 100% by meeting project milestones and expenditure targets of $10.35 million by 2019.

By June 30, 2020, Cobalt Blue is aiming to have secured project financing and make a decision to mine.

That would be ideal timing if forecasts from Roskill are correct.

It recently noted the pick-up in potential cobalt tailings operations, which may fill supply gaps in the medium-term, but it sees supply tightening beyond 2020.

And Kaderavek said there were almost no new copper or nickel mines under development globally that would produce enough cobalt to meet growing demand.

Kaderavek and chairman Robert Biancardi last month spent four days in China, visiting companies responsible for more than 80% of Chinese cobalt capacity.

Cobalt Blue, a spin-off of Broken Hill Prospecting, listed in February after an oversubscribed $10 million initial public offering.

The company had $8.2 million in cash at the end of March.

Kaderavek said the company had enough cash to meet all of its targeted expenditure over the next two years, but may have to undertake a small raise to complete the BFS.

The stock peaked at 33.5c shortly after listing, but like the rest of the resources space, has pulled back since.

This morning Cobalt Blue shares gained 1c to 20.5c, slightly above its 20c IPO listing price.

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