Is Commodity Price Scenario Helping Northern Cobalt To Move Up On ASX?

Iron ore prices are marking a surge over the steady demand from the global steel market. The ongoing trade talks between U.S-China is supporting the building optimism among market participants over the betterment in the global economy, and thus, in turn supporting the prices of basic commodities such as steel, copper, and along with it the basic raw material required to make steel, i.e., iron ore.

Apart from the steel industry, the electric vehicle market is also noticing a surge, which in turn is supporting the metal prices, such as Cobalt, Nickel, Copper, etc. — in the environment of supply concerns, majorly caused by the ban on Brazilian giant miner Vale and rising metal prices. The companies which can take advantage of supply disruption and jump in to fill the supply, in terms of increased production or high mineral resources with various exploration project can better position themselves to lock in the higher cash inflows in terms of high realized price on the rising commodities.

Northern Cobalt Limited (ASX:N27) currently holds various exploration projects. It is a mineral resource company, engaged in the acquisition and exploration activities as well as production of cobalt, lithium, copper, vanadium and iron ore, along with various other strategic metals.

In the recent announcement, made on 26th February 2019, the company mentioned that it has completed aeromagnetic survey over the Snettisham Vanadium project. The survey, which was conducted over an Alaskan-style mafic-ultramafic intrusive complex, resulted into an exceptionally high magnetic anomaly with historic vanadium samples, confirming the high potential of significant concentrations of vanadium-bearing magnetite and the historical surface samples revealed a vanadium potential with a value up to 0.56% V2O5.

Infrastructure challenges and how the company’s project location is beneficial:

The primary infrastructure requirement for processing vanadium concentrate and, to export them to the market, is cheap electricity, Access to bulk material handling and transport facilities and last but most important the experienced workforce.

The Location of the Snettisham Vanadium project is well placed to take advantage of existing infrastructure as Snettisham Hydroelectric Power Plant is 18km to the north-west from the project location and the main transmission line runs within 2.5km of the project. The project is present on a coast, adjacent to deep-water channels, which makes it capable of hosting Panamax and Cape class transport vessels and transport vanadium to the U.S and other steel markets.

The location also supports the workforce of the project, as the capital city of Alaska (Juneau) is located 50Km to the north of the project. The City has a population of 35,000 people, which consist of a mining community.

Apart from the high vanadium prospective, the company also controls, Wollogorang Cobalt Project, which hosts near-surface sedimentary cobalt and copper resources. The company also confirmed significant cobalt and copper mineralisation, on Stanton Cobalt and Running Creek deposit.

The company is into high exploration activities along with decent infrastructure and can position itself to take advantage of high commodity prices in the market. However, the company’s plan to take a 3D modelling of the magnetite region and the data collected will further represent the position of the company better in the future, and further exploration activity along with mineral grades will also impact the position of the company.

The investors may keep an eye on the developments on the company’s various projects.

As on 8th March, the company’s stock zoomed up by 42.5%, closing the day’s session at A$0.057. Over last five days, the stock has soared by 11.11% as on 7 March 2019.

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