Cobalt Blue’s BHCP Update Highlights Increased Ore Reserve, Longer Operating Life and Lower Costs

Summary

• Broken Hill Cobalt Project Update 2020 Study by Cobalt Blue has delivered significant project enhancements since the 2018 prefeasibility study.
• Mineral reserves improved by 55% to 71.8 million tonnes at 710 ppm cobalt.
• Front-end mining and concentrate throughput capacity increased to 6.3 million tonnes per year from 5.25 million tonnes per year, coupled with pre-production capital reduction by $70 million.
• Increased reserves, longer life, and lower capital and operating costs enhance the project economics substantially.
• COB plans to examine key optimisation opportunities during the upcoming feasibility study.

Based in Sydney, exploration and project development company, Cobalt Blue Holdings Limited (ASX:COB) is engaged in advancing its flagship asset, Broken Hill Cobalt Project (BHCP) in New South Wales. Recently, the Company released a project update, which highlighted significant enhancements since the 2018 prefeasibility study into the project.

What has been done so far?

Here are the key milestones in the history of Broken Hill or Thackaringa Cobalt Project-

• Completion of a Scoping Study in 2017 and a Prefeasibility Study in 2018
• Proprietary processing technology and flowsheet is now the subject of a patent application (Australian application no. 2018315046)
• Government assistance through CRC-Project Program towards optimising the beneficiation method
• Sampling programs so far confirmed high metallurgical recovery and high-quality products
• Corporate partnerships entered for commercial battery quality cobalt and sulphur products
• Extensive testwork achieved >20.8% cobalt sulphate heptahydrate and >99.3% elemental sulphur purity

Related: Major Breakthrough: Cobalt Blue Announces BHCP Testwork Achieving Battery Grade Cobalt Product

Mineral Reserves and Resources Update

Cobalt Blue plans to employ an effective multi-pit open cut mining technology using conventional drill and blast, load and haul and dump activities, for ore extraction. The Base Case mining operation plans an initial operation at both Pyrite Hill and Big Hill.

Cobalt Blue also released the updated mineral reserves estimate based on and inclusive of Mineral Resource estimates, initially released on 4 April 2019.

• Mineral reserves estimate now stands at 71.8 million tonnes of ore at a grade of 710 ppm cobalt and 7.6% sulphur.
• Life of mine is approximately 14 years of mining activities and 13 years of cobalt production.
• Mineral resource estimates total 123 million tonnes with a grade of 660 ppm cobalt and 7.3% sulphur at a cut-off grade of 275 ppm CoEq. The mineral resources were re-reported after the upgrade of the cut-off grade.

Do Read: Cobalt Blue’s Broken Hill Cobalt Project with Excellent Economics

Outcomes of the Project Update

Updates to the prefeasibility metrics are as follows:

• Cash Cost: The C1 cash cost now stands at US$9.34 per lb of cobalt including nickel and sulphur credits. The operating cost metrics decreased by ~27.4% from US$12.87 a lb initially. The BHCP project lies in the lowest cash cost quartile, globally.
• Increased mining and processing production – The mining and processing plant would operate at up to 6.3 million tonnes per annum with a concentrate refinery capacity of 1 million tonnes a year.
• Initial Capital Expenditure - The mining and processing throughput capacity increased from 5.25 to 6.3 million tonnes per year with the initial pre-production capital of $560 million including contingency of $70 million. Capital expenditure stands around a third of the average of other similar greenfield projects.
• Net Present Value – The pre-tax NPV of the project stands at $861 million while the post-tax NPV is noted at $554 million.
• Mining & Processing Infrastructure - Integrated process plant with waste disposal of mine waste rock and process plant tailings.

Future Optimisation Studies

Cobalt Blue plans to examine key optimisation opportunities under the upcoming feasibility study, including

• Capital Cost Reduction – The cobalt player plans to pursue further opportunities related to mining fleet and infrastructure capital through contractor applications, in addition to a high voltage power capital under a build own operate model (BOOM).
• Metallurgical Recoveries – As part of the pilot and demonstration plant testwork, larger-scale testing, incorporating recycle streams will be conducted, expected to boost overall recovery of metals.
• Energy Costs – Energy is 19% of the annual site cash costs – concerning electrical power consumption from the National Electricity Market. As a lower cost energy alternative, piping compressed natural gas to site would be examined.
• Mine Life Extension – Further resource development work, which may convert to additional ore reserves and lead to extended project life, is planned to be performed.

Cobalt Blue is focused on developing the Broken Hill Cobalt Project with the goal of producing commercially viable cobalt and sulphur products. The recent metallurgical testing of BHCP samples supports the future potential of application in the nickel rich battery chemistries with trace levels of metallic impurities.

COB stock settled the day’s trade at $0.115 a share on 22 July 2020, moving upward by 4.545% from its previous close.

Interesting Read: Cobalt Blue Foresees Strong Cobalt Market with Government EV Incentive Push

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