Cobalt Blue shares sky-rocketed on Tuesday after the Broken Hill Prospecting Limited (BPL) took a back foot in Thackaringa Joint Venture (TJV).
In the market release dated 4 December 2018, Cobalt Blue notified the dilution of BPL’s interest in Joint Venture on non-payment of sum called up in the billing statement. The dilution in BPL’s shareholdings directly has resulted into the increase in Cobalt Blue’s stake in Thackaringa Joint Venture, who also acts as an Interim Manager to the Joint Venture.
On 16 November 2018, the partners undertook the Thackaringa Joint Venture (TJV) meeting under which work programmes and budgets were discussed and approved by the TJV Management Committee. COB in the capacity of JV Manager issued the billing statement to COB and BPL to contribute their share required to undertake the drilling campaign currently under way at Thackaringa. The amounts relate to the expected November and December 2018 expenditure as TJV had no longer operating under the Earning Period provisions of the Joint Venture agreement. The Billing statement specified $1,499,783.50 of called sum to be paid BPL within seven days.
But BPL has failed to pay the required sum and thereby opted for dilution option via issue of Optional Dilution Notice dated 29 November 2018. Subsequently, the Cobalt Blue has today declared the results of interest recalculation and notified the Joint Venturers of their respective interests.
As per the results of recalculations, Cobalt Blue’s stake in Thackaringa Cobalt JV has increased from 70% to 93.68%, resulting to the dilution of BPL’s 30% interest to 6.32%. Notification of this recalculation to BPL and the request for transfer of interest has also been made by COB.
Further, Cobalt Blue believes that once the drilling campaign expenditure for November and December 2018 are incurred, BPL's Joint Venture Interest might even reduce to below 5% as it has stated not to contribute to the current approved work programme and budget. Meanwhile, the TJV agreement implies a threshold of 5% interest, anything below this is deemed to be withdrawal of interest from TJV.
However, BPL has triggered a dispute notice regarding the dilution formula in the TJV. BPL will review and consider COB’s claims that BPL has been diluted in the context of that dispute.
TJV is an exploration Farmin Joint Venture Agreement for Thackaringa Cobalt Project located in New South Wales. The project comprises of cobalt-rich tenements that are 100% owned by Broken Hill and are subject to farm in agreement with Cobalt Blue Holdings Ltd. Cobalt is in strong demand in current market for battery generation especially lithium-ion batteries that are used in the model of clean energy system.
Cobalt Blue expects to undertake further recalculation in late January 2019. On this good news of increase in COB’s stake in TJV, Cobalt Blue’s share price surged 6.977% to $0.230 on 4 December 2018 (1:40 PM AEST). However, in the past one year, the stock of Cobalt Blue Holdings Limited (ASX: COB) has witnessed a negative performance change of 63.87%.
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