Explorer Cazaly Resources (ASX: CAZ) is seeking to acquire a large scale, cobalt-copper project in a newly emerging cobalt province in Namibia as the insatiable demand for rechargeable batteries and supply constraints lifts the price of cobalt to 10-year highs.
The ASX-listed company has purchased an option to earn the right to a 95% stake in Kaoko Kobalt copper-cobalt project in northern Namibia.
The project contains exploration licence EPL6667 and covers 85km by 10-15km for ~970 km2. It was granted to local Namibian owned company KDN Geo Consulting CC (KDN) last month for an initial three-year period.
Cazaly has now acquired an option to purchase all the capital in Kunene North Pty Ltd, an Australian unlisted proprietary company, which has an agreement with KDN to earn up to 95% interest in Kaoko.
The area hosts the Neoproterozoic Kaoko Belt, which represents the western extensions of the copper-belt of the DRC and Zambia.
Importantly, the project abuts Celsius Resources‘ (ASX: CLA) Opuwo cobalt project where Celsius has defined cobalt-copper mineralisation for ~11km.
According to Cazaly, Kaoko hosts the probable continuation of the Opuwo cobalt-copper bearing Dolomite Ore Formation horizon, a carbon rich, marly dolomite horizon.
Celsius began exploring nearby in early 2017 and has recently stated that a maiden resource for the project is imminent.
A prime target for cobalt-copper mineralisation is highlighted by a 20km by 5km area of subdued magnetics, possibly due to alteration, coincident with anomalous copper-cobalt zinc-manganese uncovered from the regional soils survey at the Kamwe prospect.
“Should Cazaly complete this transaction, Kaoko will greatly add to our project portfolio and continues our strategy of being in the right place, at the right time with the right commodity. Kaoko Kobalt project ticks all the boxes,” Cazaly managing director Clive Jones said.
“It is located close to excellent infrastructure and adjoins Celsius Resources’ rapidly growing Opuwo cobalt – copper project within what appears to be a significant emerging cobalt bearing belt in Namibia.
“There is no doubt that we are also experiencing a major inflection point in the demand for cobalt as cobalt prices continue to surge on the back of growing concern that future cobalt supplies may be unable to meet burgeoning demand. I look forward to updating investors as we seek to finalise this acquisition.”
In order to complete the transaction, Cazaly will be required to issue six million CAZ shares and be obligated to spend ~A$270,000 by 18 November 2020 on the project, issue 10.5 million fully paid CAZ shares once a JORC compliant resource containing at least 10,000t of contained cobalt (or other metal equivalent), and pay A$1 million (or issuing fully paid CAZ shares to that amount) upon a formal Decision to Mine.
News of the purchase comes as cobalt hits a fresh 10-year high on Friday 23rd March of US$94,500 per tonne, up 26 per cent since the beginning of the year.
Namibia and cobalt
Meanwhile, Namibia is shaping up to be a future leader in cobalt production following on from Celsius’ plans to begin mining cobalt – which was originally discovered in 2012 in the Kunene region – at Opuwo in 2020.
Namibia is also regarded as a stable mining jurisdiction with good infrastructure, and clear mining codes which gives it a significant advantage over the Democratic Republic of Congo, the world’s largest but unstable cobalt producer.
Cobalt – which has a diverse range of metallurgical and chemical uses ranging from aircraft engines to rechargeable batteries – was one of the major highlights of 2017 following a dramatic swell in prices due to the insatiable global demand of the metal.
The price is also influenced by constraints on cobalt supply which is impacting the growth of the battery market.
BMO Capital Markets recently stated that even without the battery market the market for cobalt is tight and have forecast an increase of 60% in cobalt demand to 2025; there is “simply not enough supply to match this”.
Canaccord Genuity have also recently revised their long term (from 2025) forecast for cobalt pricing upwards by 32% to US$49/lb (~US$108,000/t) and potentially breaching US$50/lb in 2019.