THIS IS THE COBALT COMPANY THE MARKET WANTS TO BUY

by dj on June 16, 2017

The Best Investments have LOTS of Blue-Sky Upside…where the Market and investors’ imaginations can see huge growth.I’ve found the Blue-Metal Stock with huge Blue-Sky Upside…in fact, I think it has a great shot at being the nextcobalt producer in North America, far away from the Conflict Cobalt in the Congo.And that is something I’m convinced the Market will pay up for—in A Big Way.

The stock is First Cobalt – FCC-TSXv/FTSSF-OTCQB.  Just this morning they bought 50% of a modern, fully permitted cobalt refinery in Ontario, Canada, in a joint venture with Aussie-listed Cobalt One.

This is hot off the press, and for today only this stock is a “ground floor” opportunity.

This is what the Market wants—a pure play junior that has a clear path to production in the short term.  There are only 4 permitted refineries in Canada of this type, and the others all owned by the Big Guys.

As the cobalt market tightens in the coming years, and Big Money Institutions come looking for exposure, FirstCobalt will attract huge fund flows.

Where exactly is this refinery located? Can you believe there is a town called Cobalt Ontario on the Quebec border?  That’s because it was one of the largest cobalt districts in the world for decades, producing over 50 million pounds of cobalt at from 70 different mines.

refinery

The cobalt refinery that FCC is buying into

First Cobalt has a commanding land position in this district. Their Keeley-Frontier project covers just under 52,000 acres in Silver Centre, near the town of Cobalt.

First Cobalt wanted Keeley-Frontier because it had the best ratio of cobalt to silver of all the mines in the area, producing 1 pound of cobalt for every 5.8 oz. silver.

All told, this old mine churned out 3.3 million lbs. cobalt and 19 million oz. silver, from ore averaging 0.5% cobaltand 1,844 g/t silver.

Together, Cobalt One and First Cobalt now own the most of this prolific district, in a First World country, with a fully permitted refinery.

And this modern refinery has been recently upgraded.  It was originally built in the 1990s, and then in 2012 a German company invested several million dollars refurbishing it.  Again, the asset is fully permitted.

refinery inside
The interior of the modern cobalt refinery

An independent report by independent global EPCM consultant Hatch Inc. estimated replacement cost of the refinery at US$78 million.  FCC is buying their 50% for only CAD$8.5 million! The estimated cost to make the refinery operational again is a scant $4 million—or $2 million for First Cobalt.  This makes FCC’s cost just pennies on the dollar—at a time when the cobalt market is just about to hit critical mass.  The timing couldn’t be better.

President and CEO Trent Mell can raise money—$6.7 million so far this year, and they still have only about 50 million shares out.  In the junior resource sector—energy or mining—that’s a nice tight structure.  There is LOTS of leverage for investors with that small float

Raising more money for this refinery will be NO problem—Mell will have brokerage firms and institutions calling him all day today.

Two days ago, I gave you a long and bullish list a couple days ago on why cobalt prices will continue to head higher:

  1. 98% of all cobalt is a by-product of copper, nickel or silver—making supply dependent on the economies of other metals.
  2. Concentration of cobalt supply in a risky area—over 60% of cobalt is mined in the DRC—Democratic Republic of Congo
  3. 10% of that supply—or over 5% globally—is mined with underage labor. That is generating a pushback among high profile end users such as Apple to find more ethically sourced cobalt
  4. Concentration of cobalt refining—over 50% of cobalt is refined in China, who have their own uses for the metal.  The fact is Chinese companies are buying up huge chunks of the supply chain for cobalt.
  5. Global demand is expected to jump 50% from 2016-2020 to 75,000 tons and then 80% from there to 2025 at 123,000 tons.
  6. Hedge funds are already stockpiling metal

So to get the best exposure to fast rising demand for cobalt, I want to find:

  • ideally a junior producer
  • with a really high grade
  • in a first world country
  • that has huge size potential

And include all my regular “must-have” factors

  • Great management team who can raise capital
  • Tight share structure

After researching all the public companies that could fit that bill, I came up with—First Cobalt.

I’m looking for a stock to do for me this year what Lithium X did for me last year – go from 30 cents to $2.80 in six months.  The cobalt market has the potential to create those kinds of wins this year.

The opportunity here is immense. And it’s all in Canada, a stable place to operate with roads and power right there. And most importantly—a fully permitted, recently refurbished cobalt refinery.

And there’s lots of catalysts here.  Now that FCC could be considered a near term producer, the stock will trade up with cobalt.

Second, FCC’s stock will be rewarded for any and all progress on the refinery becoming ready to operate again.

Third, First Cobalt will drill Keeley-Frontier this summer.  There’s a lot of leverage to this one drill program for investors.  The old mine workings are very shallow, only 200 metres deep.  So the drilling cost will be very low.

Mell and his team have a chance at creating an incredible amount of wealth with one small drill program; likely under $2 million, leaving the treasury with lots of cash.

They are drilling into the sides of an old cobalt mine, so investors know that they’re going to hit LOTS of cobalt—it’s just a question if the grade is high enough over a long enough width to turn this high grade silver mine into a bulk-tonnage cobalt mine.

But the drill program is just the sizzle on the steak.  The meaty part of this company was transformed overnight—just last night—with the 50% purchase of the cobalt refinery.

So today, this is a ground floor opportunity—Day 1—in what will likely become North America’s next cobaltproducer.

For an Enterprise Value of just $25 million institutions and retail investors get a cashed up pure play–in an ethical location–with a tight structure, the comfort of a fully permitted facility and a near term exploration play that could create hundreds of millions of dollars in value.

Sign me up.

cobalt price
I’ve put my money where my mouth is–I’m long 100,000 shares of First Cobalt at 50 cents.
First Cobalt management has reviewed and sponsored this article.

 

DISCLAIMER: 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.

 

 

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