Northern Cobalt softens Congo tax increases with extra Australian cobalt discoveries

Northern Cobalt ASX N27 drilling complete Wollogorang project
Drilling at Northern Cobalt's Wollogorang project.

Successful Australian cobalt explorer Northern Cobalt (ASX: N27) has confirmed that its flagship Stanton deposit is not a one-off, with scout drill results pointing to the potential of up to another six similar deposits nearby.

The drill results also boosted the viability of Stanton, with confirmation that the deposit remains open to the south-east and north-west, with a magnetic low also indicating significant potential for an extension to the north-east.

That is a vital result given that the Stanton deposit has already recorded some excellent drill results including 11m grading 0.29% cobalt, with a 2m interval containing 2.33% cobalt, 0.45% copper and 1.01% nickel.

Stanton has a current inferred resource of 500,000 tonnes grading 0.17% cobalt, 0.09% nickel and 0.11% copper but these figures are now expected to rise as the scoping study on Stanton progressively incorporates new drilling results.

Relief for cobalt users

The Northern Cobalt drill results will come as a significant relief for cobalt users following confirmation that the Democratic Republic of Congo (DRC) will hit new and existing cobalt miners in the country with large tax rises.

Cobalt is one of the hottest commodities in the world at the moment due to the boom in demand for batteries in electric vehicles and a potential supply shortage, with around 60 per cent of world supply coming from the DRC as a by-product of nickel and copper mining.

The DRC has now tightened its grip on that vital cobalt supply as Glencore restarts its Katanga mine, ERG’s $1 billion RTR operation comes on stream later this year and Nzuri Copper’s advanced Kalongwe project enters production.

Potential for another six Stanton style deposits

Perhaps the most surprising aspect of Northern Cobalt’s drilling result was the potential for up to six Stanton style cobalt deposits at Running Creek, east of Running Creek, Stanton 2, Stanton 3, Archangel and north of Stanton.

The further drilling at Stanton was also encouraging with 19 metres at 0.29% cobalt (Co) on the southern extension to Stanton Resource, including 1 metre @ 1.31% Co.

Other holes produced 5 metres a 0.19% Co and 2 metres at 0.19% Co.

The results are a significant vindication of Northern Cobalt’s decision to greatly expand the range of its Wollogorang project all of the way to the Queensland border, with applications on the Queensland side potentially boosting the project even further.

Northern Cobalt now has its foot on 4,986sq km of ground, well up from the original 1,131 square kilometres.

Good news on the processing front as well

Importantly, the drill results so far have showed that the ore containing cobalt is primarily sulphide and non-refractory, which should eliminate the need for roasting and further processing to eradicate contaminants, greatly reducing the cost of processing.

The good drill results from within the Stanton deposit and from the scout holes indicating the potential for other deposits will now be incorporated into a revised drilling campaign for Northern Cobalt for when the Top End’s wet season ends and drilling can continue.

The company is now in the process of finalising drill targets and submitting documentation for drilling approvals for the upcoming drilling program early this year.

Northern Cobalt has also obtained a portable XRF device which can directly detect cobalt in surface and drilling samples.

That will allow almost instant “in field’’ results from drill sample analysis rather than waiting a month or more for assay results to arrive, potentially greatly improving and redirecting exploration efforts in real time.

Shares in Northern Cobalt have more than doubled since October last year as results from its drilling campaigns have been released and cobalt prices and availability concerns have increased due to the tax changes and political uncertainty in the DRC.

Small Caps interview with Northern Cobalt

John is a highly experienced business journalist and formerly chief business writer for the Herald Sun. He has covered Federal politics in Canberra, was Los Angeles Bureau chief for News Limited and was also chief of staff for the Herald Sun. He has covered a wide range of small and large cap ASX stocks and has a special interest in mining, technology and biotech.