The Global EV Trade NEEDS This Company

by Keith Schaefer on November 16, 2017

Bankers Cobalt (BANC-TSXv) is one company that will make a lot of money—in a very short time frame—from doing business The Right Way.

I think this will be the most profitable, feel-good story in resources in 2018.  Their business model will both fast-track cobalt supplies to a hungry Electric Vehicle (EV) market—rewarding shareholders—and help rid the world of child labor in Congolese copper-cobalt mines—greatly helping society.

It’s the brainchild DRC Director General Kevin Torudag—and the action is about to start.

The plan is to develop the rich, at-surface cobalt resources in the Democratic Republic of the Congo—DRC—with western ethics and exploration methods. Everybody wants Bankers to do this—the Chinese refiners, the DRC government, investors—everybody.

They might be the most needed company in resources right now.  EV sales are soaring globally, and so is the demand for cobalt.  At five year highs, producing cobalt is a highly profitable business right now.

But in early 2016, Amnesty International started a campaign to show the world how child labor and unsafe working conditions were being used by cobalt refiners in the DRC—Democratic Republic of the Congo.  And as I’ll explain to you—it’s actually working.

This is what is causing the Great Commodity Squeeze in cobalt.  The world wants guaranteed ethical cobalt–no child labor.  Sadly, it’s surprisingly hard to find–and who guarantees it?  But when they do find it, it appears that Chinese refiners are willing to pay a premium price to have  guaranteed ethically sourced cobalt.

I spoke with one of the world’s foremost authorities on cobalt about this—Benchmark Minerals out of London England.
(I’m a paying subscriber to their high quality information).

They told me that while nothing is written down in the public domain, they are hearing numerous reports that the cost basis of guaranteed clean cobalt ore has risen “considerably” in 2018 negotiations with the refiners—a very good sign that the ethical issue is being taken seriously.

That opens a huge business need–because there are a lot of Chinese refiners in both China and the DRC begging  for guaranteed ethical cobalt–that Bankers Cobalt is ready to fill.

The world doesn’t have a choice in solving this problem.  You see, most of the world’s cobalt is found in the DRC; it’s a concentrated, and therefore risky, supply.  The refining is also concentrated—mostly in China but also some in the DRC.  The cobalt here is high-grade, shallow, and therefore very, very profitable—so profitable that some companies are willing to use child labor to get it.

The global EV trade can’t continue to grow without ethical cobalt. But Bankers has found a partial solution to this issue.

Now, no one company can eliminate what’s happening in the DRC.  But Bankers is inserting themselves into the supply chain in the DRC to provide Western-style exploration work—complete with all the ethics, certification, and documentation—to Chinese refiners that guarantee the cobalt they’re getting has been ethically explored and developed.

Torudag has spent years in the DRC, developing relationships and acquiring what he and his veteran team of geologists think is some of the best cobalt supply in the country.  And they should be able to get a premium for it as they develop this The Right Way.

With Amnesty International’s good work being recognized in the cobalt price, the Market is now ripe for a business plan like this.  There is a shortage of “ethical” cobalt ore—and refiners are showing they’re willing to pay up for it.

“There is a desperate need for certified (cobalt) supply,” says Bankers President and CEO Steve Barley.  “They have to have it.”

Torudag explains how the cobalt market developed in the DRC to create a niche that they can fill.  He says the Chinese greatly increased refining capacity, while at the same time the DRC government stopped giving out exploration permits.

Quality ore quickly went into short supply. Artisanal miners became more important for supply…but their supply was small, and not consistent quality.  The Chinese themselves—great builders of infrastructure—were not so good at exploration and development.

As a result, cobalt supply became much tighter. And that was before the Amnesty campaign started—which has made the Market even tighter.

When exploration permits were granted for a limited time this year, Torudag and Barley secured 14 of the best properties available, and are now ready to rapidly develop those cobalt-rich assets—The Right Way.

“On our sites, we are imposing Canadian health and safety regulations,” says Barley.  “We are coming in, we are providing the certification, the Canadian transparency, the full audit on everything we do.

“There is no corruption. You are getting good clean ore, and that is so important to them (the Chinese refiners) right now.”

Torudag says the Chinese are keen to help Bankers do their work The Right Way.

“I gave a proposal to them, and halfway through my meeting, they’re just like ‘Okay, how much money do you need? We’ll support you, we’ll invest in you. You do the work.’ So we’ve immediately become a potential long-term supplier to the Chinese smelters here.”

They want to outsource the exploration work he says—but also the responsibility of certifying that it’s “ethical” cobalt.  “They’re going to point the finger at us,” he says, and that’s OK with Bankers Cobalt.

He adds—”If we find one deposit, then, you know, that makes us golden.”

CEO Barley suggest that could happen sooner than anyone expects: “The initial successes won’t be very long in coming.   As soon as you identify a resource you can go to an exploitation permit and you can basically bring your equipment on site and start mining.  So the cycle is tremendously short in comparison to the typical North American story.

“Monetization here is not a 10-year venture. I would be surprised if we haven’t had our first sale in maximum 12 – 18 months.”

Shareholders are used to waiting for years for cash flow in junior mining.  This will happen in months.  That’s what makes this stock so powerful for investors.

Everyone in the Congo has great respect for Canadian geologists, and Torudag says the Chinese are willing to buy a property that has what’s called an ‘inferred resource’ under the Canadian national mining code (the industry calls this a 43-101 report). It takes hardly any time or money–just several widely spaced drill holes–to get a high-grade asset to this level.

“They just need a Canadian 43-101 stamp on it,” says Torudag, “because they want to point to that as being the source of their certified supply of ore. That is the importance of it. We don’t have to do bankable feasibility or even a preliminary economic assessment…they will take it as soon as we can identify it.”

Fast payback and non-dilutive capital–music to the ears of shareholders.

The story gets even better.  Not only do the refiners want to outsource the exploration of this high grade shallow ore (and fund Bankers Cobalt to do it if necessary), but there are Chinese buyers here—I came up with at least TEN in my research—competing for this guaranteed clean ore.

“There is a lot competition for it, which is why I am 100% certain that we will be getting a premium even over and above spot prices for our cobalt and copper,” says CEO Barley.

Torudag adds “The supply-demand dynamics are very different because the infrastructure is built, and most of these smelters are not operating at full capacity. Therefore your product becomes valuable. You’ll get a premium to it, especially with respect to the way we want to do things where we can demonstrate where the copper cobalt is coming from.

“We can give them a very good comfort level with respect to a reserve side and a grade value. So you’re basically going to be getting probably 25 – 35% premium.”

Bankers has lured away Chinese national Shu Zhan to work with them.  Zhan has worked as a geologist all over the world for Asian and western mining companies, and also worked for a Chinese refiner in the DRC.  Having “local” knowledge of your buyers will certainly help.

Bankers is a remarkable story, and I think it’s going to be a remarkable stock.  The demand for ethical cobalt in the DRC opens a much-needed busines opportunity–that Bankers will be filling within weeks as they begin exploring, and talking to Chinese refiners.

And as Bankers’ does good work, both shareholders and society will reap great rewards.  Management is confident success  will come fast–the demand is that great. Cash flow will come MUCH quicker than any other junior mining story—with much less dilution. That’s what makes stocks go up.  And that’s why I’m long TODAY.


Bankers Cobalt management has reviewed and sponsored this story.

The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons.  Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom.  Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements.  No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.

Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity.  He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.

Comments on this entry are closed.

Previous post:

Next post: