Northern Cobalt enters booming vanadium space with Snettisham acquisition

Northern Cobalt (ASX: N27) has shouldered into the vanadium space after pegging up the Snettisham project in Alaska’s south-west.

The project comprises 48 mineral claims and is close to existing key infrastructure including the Snettisham hydroelectric power plant and an adjacent deep-water channel for shipments.

Alaska’s capital city Junea is only 50km from the project with an experienced local workforce due to the numerous gold and base metal mines in the region.

According to Northern Cobalt, the Snettisham project was appealing due to its proximity to infrastructure, large-scale potential and the climate, which makes the project amenable to year-round exploration.

“Not only is the company placing itself as a potential supplier of cobalt to the electric vehicle markets, it has now acquired a significant vanadium project that gives it exposure to the demand for the metal in vanadium flow batteries and the increasing demand for use in high-strength steel in the building industry,” Northern Cobalt managing director Michael Schwarz said.

The acquisition was low-cost because Snettisham was not subject to an existing mineral claim. As a result, Northern Cobalt was able to simply peg-up the ground.

Snettisham vanadium project

Since the 1950s, exploration at Snettisham has focused on iron ore mineralisation, with the most recent owner Arrowstar Resources relinquishing the property when the iron ore market plunged in 2013.

“After reviewing data from historic iron ore exploration, we identified high levels of vanadium at Snettisham, which combined with magnetic surveys and analysis of regional geology, suggest there is significant mineralisation at a depth of 50m to 100m,” Mr Schwarz told Small Caps.

“The mineralisation of this vanadium bearing magnetite system is consistent with many of the economic vanadium deposits currently in production,” Mr Schwarz added.

Preliminary exploration will involve a drone-based, low-level magnetic survey across the entire project.

Northern Cobalt anticipates it will have the data in the new year and will then carry out detailed modelling to identify primary targets.

The company plans to undertake a maiden drilling campaign before mid-2019.

Vanadium market

The world’s largest vanadium producers include TSX-listed Largo Resources, AIM-listed Bushveld Minerals and LSE-listed Glencore.

Currently, commercially-viable vanadium production arises from magnetite deposits.

Similar to other commodities, the vanadium market languished between 2010 and 2017. However, the market is now booming with the price for 98% vanadium pentoxide rising from US$3.50 per pound at the beginning of 2017 to more than US$33/lb – equating to a rise of more than 800%.

Driving this growth is the surging steel sector, including China’s new rebar standards that require more vanadium be incorporated in the steel.

Additionally, the emerging vanadium redox flow battery sector is expected to increase vanadium demand further with the battery predicted to consume 20% of global vanadium production by 2030 – up from its current market share of 2%.

Wollogorang cobalt-copper project

News of Northern Cobalt’s Snettisham acquisition follows the company’s announcement it had unearthed a 55m copper intersection while drilling at the Running Creek prospect, which is part of the company’s flagship Wollogorang cobalt project in the Northern Territory.

The 55m intersection ended in mineralisation and graded 0.78% copper. It comprised higher-grade intervals of 33m at 1.08% copper and 13m at 2.01% copper.

Cobalt grading up to 1,604 parts per million was also uncovered at the prospect, with Mr Schwarz saying the prospect was revealing a much larger mineralised system than the flagship deposit, Stanton.

“The acquisition of the Snettisham vanadium project continues our commitment to finding and developing new battery metal resources world-wide.”

“Whether its batteries for your next car, mobile phone or even massive government-funded projects like the South Australian wind farm battery, Northern Cobalt is working hard to provide the raw materials to power our future,” Mr Schwarz added.