Cruz Capital looks to grab promising ground as cobalt frenzy about to explode
Search Google News for “cobalt exploration” and you’ll find scant information. That’s about to change, and Cruz Capital Corp (TSXV: CUZ | Germany: A2AG5M) is intending to be out there in the lead. And it expects that this is just in time: the signs are that the cobalt stampede is about to begin, just as we saw hordes of juniors looking to turn their fortunes around by, first, embracing graphite and then lithium as the tide changed toward the latter – just as the juniors had done with uranium in 2007 and phosphate a year later.
Cruz Capital announced this week that it had acquired the War Eagle cobalt prospect in the Fort Steele mining division of British Columbia. Not much is known about this project: back in 1948 a file was lodged with the province’s government, reporting that there were old workings there, and test pits, but there is no immediate information as to when and how the prospect was mined — and if anything was ever produced of note. But what whetted Cruz Capital’s appetite was the notation in the file that there had been surface sampling that had produced assays of 6.41% cobalt, 3.59% nickel and 7.25% copper — grades that are more than encouraging. Cruz knows these numbers cannot be relied upon; there is no knowing who compiled them or the manner in which the grades were assessed. But these figures are good enough a target to encourage Cruz to send crews to the property shortly to begin a proper assessment.
Cruz has realized that no one much has been looking for cobalt of late — but they will soon be as people realize that there’s a looming shortage and this could inhibit the production of lithium-ion batteries.
(Incidentally, despite its name, Cruz is not a financial house: its most recent project was a gold property in Tanzania.)
The company is planning to peg cobalt prospects in the United States and Australia as well as in Canada, getting these secured before the expected land rush occurs. They will either joint venture these, or advance exploration and development.
Cruz is probably acting not too soon: on Thursday, an Australian junior, Corazon Mining (ASX: CZN) announced it had secured a cobalt (and copper and gold) project near Grafton, New South Wales. The stock rose 42.8% with 40 million shares changing hands. Also in recent days Broken Hill Prospecting (ASX: BPL) has managed to raise about A$1 million and will now update the scoping study on its Thackaringa cobalt project near Broken Hill, NSW.
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Expect more of these announcements.
It’s all about batteries: Jim Nelson, president of Cruz Capital, said he expected cobalt demand, primarily for electric vehicle batteries, would continue to increase in the near and distant futures. “We feel cobalt has been under-exposed in light of lithium companies dominating the market place,” he added.
Reuters reported last week that prices for cobalt metal are expected to rise by 45% by 2020 as stricter emissions controls push demand for electric vehicles. In fact, Reuters used a sub-heading in the report stating “Stampede for Cobalt” — a prediction that concurs with Cruz Capital’s view of the market.
As the agency pointed out, China has few cobalt resources, which is why the State Reserves Bureau in Beijing late last year bought 2,200 tonnes of the metal. Traders say China is in the market at present for another 2,800 tonnes. Many see the recent move by China Molybdenum to buy the Tenke copper mine in the Democratic Republic of Congo as being largely motivated by the need to secure reliable cobalt supplies through Tenke’s main by-product.
There is growing consensus on the subject of the size of the coming cobalt deficit that it will reach at least 7,000 tonnes a year – not much if you’re talking iron ore or even copper, but big news for cobalt.
About 60% of cobalt supply comes as a by-product from mining copper. Another 30% comes as a by-product of nickel. Only 10% comes from primary cobalt mining — and this is where the speculative action is going to be, not in some company announcing it has small amounts of cobalt in a copper deposit.
Cruz Capital is on the scent of good cobalt targets — and is sure plenty of other juniors will soon be joining it.
Publisher’s Note: Cruz Capital Corp. has 6.475,582 shares outstanding and is a new InvestorIntel member.
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