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Globally all the major developed economies are pledging to reduce their dependence on fossil fuels and switching to electric and hybrid vehicles. The structural shift in the stance has seen the demand for commodities such as Nickel and Cobalt inch up since it is used in the manufacturing of battery packs and setting up of charging infrastructure. The focus on resources companies that cater to this growing demand is intensifying, one company that is well positioned to capitalise on this demand is Corazon Mining Limited.

Corazon Mining Limited (ASX:CZN), is a Perth based diversified mining explorer involved in developing the Lynn Lake Nickel mine in North America and Mount Gilmore Cobalt projects in Australia. Corazon has prioritised its Lynn lake Nickel project to accelerate the commissioning and further using the strong free cash flow from it to finance the Mount Gilmore Cobalt project. This is in line with the vision of the company, which is to take advantage of the high Nickel prices by commencing the Lynn lake Nickel project and then use its resources on the Mount Gilmore project with growth in the Cobalt prices.

Shareholding Pattern

The top 20 shareholders hold roughly 38% of the total equity of Corazon with significant stakes held by Hanking Australia Investments and Tattersfield. The board owns almost 1.8% of the shareholder’s equity.

Source: Annual Report 2019

Management Information

Mr Terry Streeter – Non-Executive Chairman

Corazon recently appointed Mr Terry Streeter as the new non-executive chairman replacing the incumbent Mr Clive Jones, Mr Streeter will help fast track the exploration and advancement program at the Lynn Lake Nickel-Copper-Cobalt sulphide project.

He holds an experience of more than three decades in the Nickel sulphide industry and has been at the spear front of the Australian Nickel industry. He was one of the founding shareholders of Western Areas NL in 1999, which went on to develop two high-grade mines in the Forrestania region of Western Australia. He served as the Non-Executive Director of Western Areas from 1999, and Non-Executive Chairman for over 6 years from 2007 to 2013. Currently, he is a Non-Executive Chairman of Fox Resources Ltd, Non-Executive Chairman of Moho Resources Ltd and Non-Executive Director of Emu Resources NL.

Mr Brett Smith – Executive Managing Director

Mr Brett Smith holds a B.Sc. Hons (GeoI) and is a member of Australasian Institute of Mining and Metallurgy (AusIMM) and The Australian Institute of Geoscientists (AIG). He holds over three decades of experience as a geologist, manager and director of mining and exploration companies. He also qualifies as a Competent Person as defined by the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” for the Lynn Lake drilling program.

He served as the director of Battery Minerals ltd. from 2012 to May 2019 and Pacific Bauxite Ltd from 2014 to 2018.

Mr Clive Jones - Non-Executive Director

Mr Clive Jones holds an extensive experience of over 30 years in the minerals exploration and development industry working into multiple commodities both in Australia and overseas. He is currently the joint managing director of Cazaly Resources and Bannerman Resources.

Mr Jonathan Downes — Non-Executive Director

Mr Jonathan Downes holds a total of over 25 years of experience in the geological and corporate capacities in the minerals industry. He has work experience in base metals, precious and strategic metals and has been involved in multiple public and private capital fundraisings. He was the founding director of the Moly Mines and Siberia Mining. He is also a Non-Executive Director of Ironbark Zinc Ltd.

Dr. Mark Qiu — Non-Executive Director

Dr Mark Qiu holds a PhD in Economic Geology from the University of WA and specialises in project generation and development in the resources industry. He also serves as the director to the China Hanking Holdings Limited.

The Tale of Two Commodities

Nickel and Cobalt- the two strategic commodities for the futuristic battery storage industry have started to realise the growth in demand with an increase in EV adoption from countries specific to EU, Asia and North America. The increase in the Nickel prices to the yearly record value of $18,000 a tonne due to increasing demand for electric vehicles and a probable supply deficit, being enhanced by Indonesia’s recent Nickel ore export ban. In fact, accounting to the disruption in supply, Goldman Sachs has raised its 12-month price outlook from $16,000 to $22,000 per tonne.

Suggested Read: Indonesia Export Ban To Create A Nickel Boom While Mincor And Independence Develop Assets

Cobalt, another commodity used for Cathode in battery packs, has experienced issues with the supply in the past. These disruptions have led the major car manufacturers to minimise the Cobalt percentage in their battery packs. The Cobalt supply is heavily controlled by the Democratic Republic of Congo (DRC), which faces issues socio-political issues and often lead to fluctuations in the Cobalt supply. The major battery manufacturers are trying to secure supplies of Cobalt outside DRC. The positioning and timing of the Mount Gilmore project could prove it as a long term cash cow for Corazon.

Lynn Lake Nickel-Copper-Cobalt Project

Lynn lake is a brownfield Nickel project located in Manitoba Canada, which had been operated until 1976. The project falls in the La Ronge – Lynn Lake Greenstone belt. The region characterises in intrusions punctuated with smaller “pipe-like” massive sulphide mineralisation. The project includes a large resource base as per the 2012 JORC code and is currently being explored as a possible brownfield opportunity. With the hike in the Nickel prices, the Nickel sulphide project has become the prime focus for Corazon.

The company started drilling program on the Lynn Lake property in July 2010. The first drilling program led to the discovery of El Deeps in 2011. The further exploration program led to the discovery of massive Nickel sulphide resources and led Corazon to acquire the Victoria mining operations in Lynn Lake region in 2015. 2019 had been a bright year for Nickel bulls, as Nickel hit five years high of $18,000 a tonne. Corazon intends to accelerate the commissioning of the project.

Source: Company Presentation

The Lynn Lake project is placed in a mature Nickel producing environment and hosts an all year mining access to the area. The local infrastructure includes already developed townships, hospitals and community centres for the employees. The mine site includes access to water and power for the mining operations. The mine has a sealed airstrip and access to the rail. The matured and mining-friendly infrastructure enables the project to come online with little financing.

Suggested Read: Corazon Announces Preliminary Drilling Results On Sulphides Intersections At Lynn Lake

The project is carrying out metallurgical testing using state of art technologies producing separate high-value Nickel/Cobalt, and Copper concentrates. The test results came out with excellent product specifications-

  • Nickel concentrate – 26% Ni grade at 71% recovery
  • Copper concentrate – 27% Cu grade at 77% recovery

The Market support and sentiment for Nickel sulphide projects is growing, and Corazon intends to tap the opportunity at the right time. The company expects to complete scoping studies and targeting for exploring additional mineralisation in future.

Mt Gilmore Copper-Cobalt-Gold Project

Corazon earned its way to 80% stake of the Mt Gilmore project which hosts giant copper-Cobalt geochemical anomalies. The Cobalt primary project is located in the New South Wales province of Australia, almost 35 kms from the nearest town of Grafton. Corazon released an update in July 2019, upon earning 80% stake in the Mt Gilmore project by completing $2 million of investment in the exploration of the project within three years of the start of the agreement.

Source: Company Presentation

Apart from the conventional exploration techniques, Corazon has conducted an induced polarisation survey with help from Fender Geophysics. The newly identified Cu-Co-Ag anomalies in properties are being studied for the presence of concealed sulphide bodies of Copper, Cobalt and Gold. As per the current understanding, the Cobalt mineralisation is associated with Quartz Tourmaline Breccias.

The metallurgical studies so far result in the pressure oxidation as the most preferred processing method with separate Cobalt and copper products. The separate products will save huge treatment and refining charges (TcRc) minimising the operating expenses.

Detailed exploration and metallurgical scoping studies are required for Mt Gilmore project, and Corazon would take the advance steps with the rebound in the commodity prices.

Backed by a strong management team, Corazon is focused on its strategy of pursuing the right commodity projects at the right time which could help the Company establish as the market leader in the EV boom.

CZN stock price has surged by over 80% in the past six months, as on 13 January 2020, it was trading at $0.004, with a market capitalisation of $8.35 million.


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