Cobalt, a global demand-driven commodity with an anticipated compound average growth rate (CAGR) of at least 30% (as per experts and key companies operating in the sector); and gaining traction at the back of rapid growth in new battery technologies in electric vehicles and energy storage. Based on demand from these markets, cobalt consumption had been indicated to grow from 53,043t in 2015 to 120,660t by 2025.
 

Pioneer Resources Ltd (ASX: PIO)

PIO Details
 
Vouching on long-term plan: Pioneer Resources, an active minerals resources company focussing on the exploration and development of key global demand-driven commodities including cobalt, has a long-term plan to build a strategy which will help it to discover and develop high value mineral resources for maximising the value of assets and deliver strong returns to shareholders. However, in FY17, the group incurred an operating loss of $2,522,555 (2016: $1,673,138) and experienced net cash outflows from operating and investing activities of $4,152,137 (2016: $2,553,814), and this indicates a concern with regards to the financial growth. The group’s net asset position has been 12,264,434 as on 30 June 2017 as compared to 13,323,046 as on 30 June 2016. During the year ended 30 June 2017, no options expired while in 2016 a total of 15,000,000 unlisted options exercisable at 30 cents each had expired. The Basis Earning Per share increased from 0.22 to 0.24 from 2016 to 2017. During the financial year, PIO sought approval for participation in the Western Australian Government’s Exploration Incentive Scheme which is an initiative that aims to encourage exploration in Western Australia for the long-term sustainability of the State’s resources sector. The co-funded government incentive related to an approved drilling program at the Blair Dome Project. PIO also has a farm-out agreement with Northern Star (ASX: NST), which has spent $3m within 3 years and this can increase NST’s ownership to 75%. PIO is earning up to 80% ownership in the project from International Lithium Corp. The company has been actively establishing an exploration strategy for its cobalt asset, Golden Ridge Project, and has commenced reverse circulation drilling with assays expected at the end of January 2018. Following on from the successful outcomes of the geochemistry and mapping programmes at PEG003-PEG009 for the Sinclair Zone Pollucite Deposit, the next step is to drill test the resultant targets for lithium, focusing on spodumene-prospective areas, and caesium in pollucite. Drilling at Mavis Lake Lithium Project is also tracking well.
 
Stock performance: The stock has surged about 93.75% in last three months (as at December 04, 2017). Given the potential expected from cobalt project and other key projects, we give a “Speculative Buy” recommendation at the current market price of $$0.03


PIO Daily Chart (Source: Thomson Reuters)
 
 

Cobalt Blue Holdings Ltd (ASX: COB)

COB Details
 
Focusing on Deriving Better Value: Cobalt Blue, which is a pure-play cobalt focussed energy solutions company for the express purpose of advancing the development of a cobalt mining operation in New South Wales, Australia, indicated for completion of diamond drilling at Thackaringa Project during 2016-2017 using a triple tube system with a HQ3 diameter. Holes were drilled at angles between 40 and 60 degrees from horizontal and the resulting core was oriented as part of the logging process. The Thackaringa Project, 23 km west of Broken Hill and 400km by rail from Port Pirie consists of four granted tenements (EL6622, EL8143, ML86 and ML87) with total area of 63 km. The main targets for exploration are well known and document large tonnage cobalt-bearing pyrite deposits. The project area is under-explored, with the vast majority of historical exploration directed at or around the outcropping pyritic cobalt deposits at Pyrite Hill and Big Hill. Furthermore, by no later than 30 June 2018 the Company must complete a further approved Stage 2 exploration program with an expenditure of $2.5 million (GST inclusive). The directors acknowledge that the company will need to raise further funds in 2018 to complete Stage 3 under the JVA. While the Company will retain its interest in the JVA, if the funds are not raised in 2018 the Company will defer the commencement of Stage 3 and consider alternative strategies. The Company leases a serviced office on a month-to-month basis at a cost of $1,750 per month. During the financial period, the company with $10,000 capital commitment on incorporation, the Company raised $555,000 in seed funding and $10,000,000 through an Initial Public Offering in January 2017. The group now aims to release its indicated resource upgrade by 1 April 2018.
 

Project Schedule (Source: Company Reports)
 
Stock performance: There has been a significant upward improvement in share price of COB in last six months while the stock was down 11.7% on December 05, 2017. The boost has been at the back of above developments and strong continuity of cobalt mineralisation along both strike and down dip of the previous drilling at Railways. Thackaringa project is estimated to be valued at hundreds of millions of dollars against the current fully diluted market capitalisation. We give a “Speculative Buy” at the current market price of $0.525


COB Daily Chart (Source: Thomson Reuters)
 

Northern Cobalt Ltd (ASX: N27)

N27 Details
 
Significant Momentum: Northern Cobalt is an emerging resource company engaged in the acquisition, exploration and development of cobalt mineral projects, with a clear strategy to focus on developing cobalt assets such as its existing Wollogorang Cobalt Project, located in the north-east corner of the Northern Territory. Organisations such as Tesla and Apple have indicated their preference for using ethically mined cobalt from other countries, which could create a large supply deficit other than DRC (Democratic Republic of Congo), and this lays down some opportunity for N27.
 
Northern Cobalt Ltd.’s 100% owned Stanton Cobalt Deposit in the Northern Territory, has been embarked on a planned 20,000m drilling program, scheduled to be completed before the end of 2017. Initial drilling will focus on upgrading the current JORC 2012 resource with more than 40 RC drill holes to be completed near the current resource. Once completed, the rig will move on to test a further 21 nearby prospects, 11 of which have historic mineralised drill intersections. Significantly, the latest drilling shows that the mineralisation remains open to the south, in an area previously thought to be closed off at the sediment hosted Stanton Cobalt Deposit. Highlights include 20 metres at 0.31% cobalt (Co), 15 metres at 0.21% Co and multiple shallow individual metre grades of 1.10% Co.
 

Drilling Update (Source: Company Reports)
 
Stock Performance: The group is expected to get an impetus from the ongoing exploration plan with opportunities existing to further extend the mineralised system which could lead to conversion into additional resources. The stock has been up 174% since listing but dropped 6.8% on December 05, 2017 which may be partly owing to overall mining sector drag along with some profit booking. Considering the dip and N27’s potential, we give a“Speculative Buy” recommendation at the current market price of $0.55
 

N27 Daily Chart (Source: Thomson Reuters)

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