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From Cobalt, Ontario

TSX Venture Exchange and Gold

The Venture’s 3-week winning streak was snapped with an 8-point loss last week, though several individual plays we follow made powerful moves including Jaxon Minerals (JAX, TSX-V), up 45%, PyroGenesis Canada (PYR, TSX-V), up 34%, and Critical Elements (CRE, TSX-V), up 30.5%.

With the price of Cobalt touching its early 2017 high of $25.63 last week – the best levels in nearly a decade – Cobalt stocks have turned the corner after a spring correction that sent most of them to their rising 200-day moving averages (SMA’s) or a little lower.

Below is a fresh 1-year chart that shows how Cobalt made a robust move from the beginning of 2016 into early 2017, consolidated during the spring between $24 and the $25.60’s, and could now be ready to begin a new leg to the upside – especially considering how Cobalt stocks  behaved last week.

Lithium-ion battery powered transportation and communication are underpinning what is likely the most powerful bull market ever witnessed in Cobalt.

Northern Ontario is the Heart of Canadian Cobalt Country with world class grades and vast untapped Cobalt potential in quartz carbonate veins that were overlooked in favor of exceptionally high-grade Silver in the 1900’s when the Gowganda-Cobalt-Silver Centre district gave birth to Canadian hard rock mining and was the world’s 3rd most productive Silver region as late as the 1960’s.

Summer programs have started in earnest here in northern Ontario.  Last week’s big movers were CobalTech (CSK, TSX-V), up 54.5%, First Cobalt (FCC, TSX-V), up 40.4%, Cruz Cobalt (CUZ, TSX-V), up 25.7%, and Cobalt Power (CPO, TSX-V), up 24%.  Castle Silver Resources (CSR, TSX-V), up more than 250% this year, held steady at 26 cents but is poised for a fresh advance.

BMR research shows that the strongest of the above 5 companies, fundamentally, are CSR, First Cobalt and Cobalt Power, and CPO is also the first to commence drilling in the Camp as it takes aim at its promising Smith Property, an extension of the past producing Deer Horn mine.  CPO closed at 10 cents Friday for a very modest market cap of less than $6 million.

Dr. Andreas Rompel, President and CEO of Cobalt Power and an expert in structural geology, oversaw a very astute and systematic exploration program prior to the start of drilling at Smith.  Ground and airborne geophysics, extensive mapping and 3-D modelling were used to delineate the targets that are being tested during this nearly 2,000-m campaign that could continue for at least another month.  Drilling is focusing on patented claims in the northwestern section of the property, an obvious but under-explored extension of the Deer Horn. 

From the early 20th century to the mid-1960’s, Deer Horn produced a reported 11 million ounces of Silver and 100,000 pounds of Cobalt (like elsewhere, the Cobalt was targeted only in the sense of leading miners to the high-grade Silver).  Abundant data have demonstrated that the adjoining Smith Property contains the southeast extension of the veins previously mined at Deer Horn.  All the necessary geological components of accepted mineralization models have been identified at Smith.

Highlights of work carried out last year included 6 samples averaging an impressive 0.50% Co from a muck pile (loose ore that has been fragmented as a result of drifting along the veins) originating from historic underground workings.  The muck pile covers an area approximately 50 x 20 m with a thickness of 3 to 4 m and is estimated to contain 5,000 to 10,000 tonnes of crushed rock.  The samples are considered to be representative of the bulk of the material within the pile, which is important.  In terms of a mining head grade, 0.50% Co would be fantastic.

CSR – First To Access Cobalt Underground

Extensive BMR research shows that despite its big advance already this year, the most undervalued play in the broader Cobalt Camp in northern Ontario remains Castle Silver Resources (CSR, TSX-V), a view that’s supported by numerous facts including the company’s currently over-subscribed private placement that has poured another $1 million into its treasury.

CSR closed Friday at 26 cents for a market cap of only about $10 million, well below that of First Cobalt, CobalTech and Australian-listed Cobalt One even though it has a technology advantage (Re-2OX process), First Nations agreements, underground access (the only company in the region with the current ability to go underground), an imminent major drill program, and a lot of high-grade Silver to go after (Silver is going to be critical to the economics in this Camp) in addition to Cobalt. 

CSR quietly but effectively developed its Cobalt and Silver assets in this Camp well ahead of when it began trading publicly in 2015.  Significantly, it has 100% ownership of Re-2OX, a proprietary hydrometallurgical process, developed in conjunction with the National Research Council, that will convert material sourced from the Castle mine into high purity, client-specific Cobalt powders for test marketing this year with end users in the battery sector.  The first in a series of bulk samples was extracted from the Castle mine in recent days.

And here’s something fascinating:  Apple, like other technology companies, has obvious need for Cobalt and Lithium.  What Apple has been emphasizing recently is its increased interest in recycled metals.  That’s a trend investors need to be aware of, and it’s one that CSR has smartly prepared for.

SGS Lakefield, on behalf of CSR, is currently using the Re-2OX process to recover metals from laptop batteries of various manufacturers.  The opportunity in the recycling space is huge and the CSR team has been working vigorously on all aspects of this for quite some time now. They are expected to soon release initial results from SGS and expand on its plans to the market.  Keep in mind, Re-2OX has already been proven to work, achieving very high recoveries (>98%) and has been further optimized.  It is highly adaptable to different types of feed.

With so much happening both on the ground and in the labs, CSR is well positioned for a near-term major breakout through resistance around 30 cents.

More tomorrow and throughout the week as BMR coverage from the Greater Cobalt Camp in northern Ontario goes underground, from inside the Castle mine!

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