This cobalt junior could have the winning formula

Global Energy Metals Corp. (GEMC:TSX.V) is striving to become a niche supplier of cobalt. In March, the company signed a long-term strategic cooperation agreement with Beijing Easpring Material Technology Co., a major battery component supplier, to build an efficient and reliable cobalt supply chain.

Global Energy Metals reported that as part of the cooperation agreement, the two companies “have agreed to a joint venture that will allow for the identification, acquisition, development, funding and commercialization of cobalt projects. GEMC will acquire the expertise and relationships that Easpring offers, including low-cost capital from Chinese institutions, leading Chinese engineering and construction skills, and Chinese machinery, equipment and other critical suppliers that meet world-class standards of quality at competitive costs in exchange for access to GEMC’s project development opportunities.”

Global Energy Metals has noted that it has granted Easpring “Right of First Refusal to acquire an interest of each project by committing to pay for the pro-rata project acquisition and ongoing development costs.” The cobalt concentrate could be shipped to Easpring, which would refine it to the exact specifications of the end-user.

In May, Global Energy Metals announced that it had entered into an agreement with Hammer Metals Ltd. to earn up to a 75% interest in the Millennium Cobalt Project in the Mount Isa mining region of Australia.

Mitchell Smith, president and CEO of Global Energy Metals commented, “We believe that Millennium represents one of the best cobalt opportunities currently available not only in that region but also globally. Millennium is an ideal first acquisition that fits into our objective that includes the acquisition of additional high quality mining assets and providing cobalt supply to our end user partners.”

As part of the agreement, Global Energy Metals must spend a minimum of CA$2.5 million on project exploration and development work within three years of signing a definitive option agreement to earn the 75% interest, divided as follows: CA$500,000 within 6 months for 25% interest, CA$1 million within 18 months for a cumulative 65% interest and CA$1 million within 36 months for the full 75% interest.

Cobalt is a critical component in lithium-ion batteries, and most cobalt produced is a byproduct of mining copper and nickel. The U.S. Geological Survey reported in its 2017 survey that global cobalt mine production decreased in 2016, mostly attributable to lower nickel production. According to the USGS, “growth in world refined cobalt supply was forecast to increase at a lower rate than that of world cobalt consumption, which was driven mainly by strong growth in the rechargeable battery and aerospace industries. As a result, the global cobalt market was expected to shift from surplus to deficit.”

While the Democratic Republic of the Congo (DRC) produces more than half of the world’s supply of cobalt, concerns over political instability, infrastructure, transportation and issues such as artisanal mining that uses child labor have led many manufacturers to search for economic and reliable cobalt supply outside of the DRC.

Global Energy Metals, with the agreements it has in place, is positioned to supply end-users with economic and stable sources of cobalt, to take advantage of the expected rising price environment for the mineral.

1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of Global Energy Metals Corp., a company mentioned in this article.

Source: The Energy Report (6/7/17)