In a heavily oversubscribed placement, Northern Cobalt (ASX: N27) has topped up its cash reserves with A$3 million to accelerate feasibility studies and exploration across its flagship Wollogorang cobalt project and its Arunta lithium and rare earth element tenements.
According to Northern Cobalt, the heavily oversubscribed placement attracted “strong support” from professional and institutional investors. Under the placement, 8.6 million shares were issued at A$0.35 each.
Additionally, a share purchase plan will be offered to current shareholders to enable them to access the same price as the placement.
Northern Cobalt hopes to raise $1 million via the share purchase and existing shareholders will receive full details of the plan next week.
Upcoming Wollogorang exploration program
Following the success of last year’s comprehensive 137-hole drilling campaign that kicked off in early October and wound up in December, Northern Cobalt plans to use its capital raising funds to widen its exploration scope by carrying-out a shallower but broader drilling program across its Wollogorang tenements.
Speaking with Small Caps Northern Cobalt managing director Mike Schwarz said a shallower exploration program would enable the company to efficiently cover more ground across its extensive Wollogorang landholding.
“In our upcoming exploration program, we are going to employ a Toyota-mounted rig and drive it around the project area and punch holes to about 20m.”
According to Mr Schwarz cobalt mineralisation grades intersected to-date were relatively uniform at surface and at depth. As such, the shallower drilling program would produce faster and less expensive results across a broader area.
“We can tell if we have the potential for a resource there just by drilling into the top 20m.”
Mr Schwarz said a week’s worth of drilling at a target area using reverse circulation rigs would take the company only a day using the smaller Toyota-mounted rig.
To hasten its exploration activities even further, Northern Cobalt has also employed a specialised XRF analyser to measure cobalt presence “pretty much instantaneously” while drilling – shortening the turnaround time for firming up targets.
As part of its strategy, Northern Cobalt plans to actively explore its southern tenements, which are believed to host larger deposits, by the final quarter of this year.
Mr Schwarz claims these southern tenements could potentially host deposits in the range of 10 million tonnes to 100 million tonnes.
“It’s called the Selby Stratiform Cobalt target. It is essentially what we’ve got at the Stanton deposit, but its covered by a cap.
“That means that the mineralisation is trapped underneath causing it to spread out horizontally.”
Mr Schwarz added the company planned to get on the ground at Wollogorang with the new Toyota-mounted rig by mid-next month, possibly earlier if weather permitted.
Upcoming resource upgrades and metallurgical results
The project’s most advanced deposit Stanton has a maiden resource of 500,000 tonnes grading 0.17% cobalt, 0.09% nickel and 0.11% copper.
Mr Schwarz said a new resource was anticipated in the next few weeks that has incorporated the results from last year’s campaign.
Also, during last year’s drilling program, Mr Schwarz said 10 diamond holes had been undertaken, which are currently being analysed.
Mr Schwarz anticipates assays from the diamond drill holes will be received in the next three weeks and will then be sent on for metallurgical testing, with final metallurgy results expected after a month of test work.
“That will be a big event for us because it will work out what sort of concentration method we could potentially use for the ore and how much our capital expenditure (capex) is going to be, so we’ll be able to confirm whether we have a low capex or not.”
Non-refractory ore could result in a lower capex
Mr Schwarz said that one of the primary advantages about its Wollogorang cobalt mineralisation is that it is non-refractory.
“Our cobalt mineralisation style is relatively unique. There are a lot of different styles of cobalt mineralisation that are out there, but what you may find with some of those is they can be associated with nickel laterite, which means the cobalt is tied up with nickel oxide.”
According to Mr Schwarz when the cobalt was tied up with nickel laterite, a high-pressure acid leach was usually required to liberate the cobalt and this was a much more expensive processing method – with potential development costs exceeding US$1 billion.
“Then you have cobalt that is associated with refractory sulphide – so, cobalt in an iron sulphide or a mineral called pyrite.
“And with these types of cobalt deposits, you actually have to roast it – so, you need to cook it to oxidise it and release the cobalt from the pyrite,” Mr Schwarz said.
These deposits usually required hundreds of millions in capital expenditure.
“Whereas, with our mineralisation, it is non-refractory – so, a simple gravity separation method or an atmospheric leach test method may work.”
He added this type of ore would be require a much lower capex to develop than the other two.
Arunta exploration schedule
Over at the newly acquired Arunta lithium and rare earth element tenements, Northern Cobalt has planned lower scale exploration activities throughout the calendar year.
Mr Schwarz said exploration at Arunta would build up to a drilling program which the company hopes to kick-off at the end of this year, or in early 2019 once the drilling campaign at Wollogorang has wound up.
Shares in Northern Cobalt were steady at A$0.39 in early morning trade.