Why Is New World Resources (ASX:NWC) Demerging US Cobalt Assets?

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Summary

  • New World Resources has 100% interest in two cobalt projects in the US.
  • The company intends to de-merge these projects into a separate entity, NewCo.
  • NWC is focused on redevelopment of the Antler Copper Project.

New World Resources Limited (ASX:NWC) is set to de-merge its portfolio of cobalt assets in North America. The demerger plan will be subject to shareholders and other requisite approvals. 

Image source: © Radius06 | Megapixl.com

NWC Strategically Focused on High-Grade Antler Copper Deposit

The decision is in line with NWC's strategic focus on the redevelopment of the Antler Copper Project.

The company has undertaken a strategic review of its asset base in the backdrop of the exceptional success of its exploration drilling and ongoing resource program at the top-grade Antler Copper Deposit in Arizona, US.

As per the Board, the value of the company’s cobalt assets is currently not reflected in the share price. Also, these assets come under a separately listed vehicle that is focused on advancing their development and exploration.

The price of the commodity has gone up from nearly USD 33,000/tonne to USD 50,000/tonne on the London Metal Exchange since the beginning of the year 2021. This represents an increase of over 50% in the cobalt price. The rise can be attributed to increasing demand for minerals that are at the core of EV production.

The company now plans to pursue a demerger of its cobalt projects into a separate entity. The move will aid the company in funding exploration at the Antler Copper and Tererro

Copper-Gold Projects. Additionally, it would offer shareholders leverage and minimise shareholder dilution in the Antler Copper Project.

Also read: Why these five penny stocks are making waves today

A Glance at New World Resources' Cobalt Assets

NWC has 100% interest in two cobalt projects in the US- the Goodsprings Copper-Cobalt Project in Nevada and the Colson Cobalt-Copper Project in Idaho. 

From 2017 to 2019, the company focused on these projects and undertook extensive and extremely successful exploration programs at these assets. Furthermore, in mid-2018, cobalt price spiked to USD 95,000/tonne, and for a period, NWC's market capitalisation surpassed AUD 40 million.

After these programs' success, drill-ready targets were identified at these project areas. The drill permits for the Colson Cobalt-Copper Project are already approved. However, later the cobalt price dropped, and the company focused more on the Tererro Copper-Gold and Antler Copper projects and hence no further exploration progressed at these projects.

Some of the other ASX-listed stocks operating in the copper space are Red River Resources Limited (ASX: RVR), Silver Lake Resources Limited (ASX:SLR), OZ Minerals Ltd. (ASX:OZL), St Barbara Limited (ASX:SBM), Aeris Resources Limited (ASX:AIS), and Hot Chili Limited (ASX:HCH) .    

Good read: Copper, Nickel & Platinum on fire: What’s fanning the triple boom?


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