The following is a Stockhouse Q&A interview with -
Global Cobalt Corp. (
TSX: V.GCO,
Stock Forum).
SH: Cobalt has been in the news lately given its importance in the rechargeable battery space and in conjunction with Tesla Motor Inc.’s (NASDAQ: TSLA, Stock Forum) battery Gigafactory that could drive cobalt demand by as much as 20%. Tesla CEO Elon Musk also recently announced that Tesla has opened up all their patents on Tesla’s electric car technology allowing competitors like BMW, Nissan etc. to benefit from a common, rapidly–evolving technology platform. How do you see this evolution in the electrification of vehicles effecting Global Cobalt?
MS: We were early to understand the importance of cobalt and its diverse range of metallurgical and chemical uses in super-alloys and industrial catalytic applications, but more critically, its necessity in the rechargeable battery sector. The battery sector represents the single largest use of cobalt and is the primary demand driver within the cobalt market. The rechargeable battery market is experiencing rapid growth due to the continued proliferation of portable electronic devices and the
emerging electric vehicle marketplace is going to further boost the demand for cobalt in batteries.
For Tesla to be able to achieve it’s intended economies of scale, both Tesla and any of it’s battery manufacturing partners will not only supply batteries for Tesla vehicles, but will also manufacture power-storage devices for other vehicles, electronic devices and the renewable energy industry. In observance of their current policy of sourcing materials from areas that have ethical, and environmentally sound mining practices and are ‘non-conflict zones’, Tesla will not for instance rely on cobalt from the DRC, and as such has acknowledged that cobalt will be the most difficult battery material to source. Developments such as these at Tesla have reinforced our vision to continue to align our company with strategic partners and develop the advanced stage, near-term primary cobalt Karakul Project located in southern Siberia, Russia.
SH: A primary cobalt project in Russia. Russia is obviously another topic that has dominated the news lately. Has the current Russian-Ukraine situation created any roadblocks in advancing the Karakul Cobalt Project?
MS: At this point we have not experienced any difficulty having access to the project, any difficulty with title, any difficulty transferring funds back and forth to Russia. We are monitoring it very closely and we’ll continue to do so.
I think that the situation in Russia has certainly made people nervous about Russia in general as a jurisdiction. That said, people were nervous about Russia as a jurisdiction before this happened and our shareholders and investors for the most part have already accepted that risk in exchange for what they feel is the upside that comes with being one of the largest primary cobalt projects in the world that’s located so close to the largest potential buyer in the world. Most of the world’s cobalt is sourced from the DRC, a region of
proven instability and has a history of conflict that could lead to future supply disruptions.
In fact, geography is actually a strength given our proximity to China. Our Russian assets are only 150 kilometres away from the Chinese border. Because of this we’ve experienced a great deal of interest from the Chinese and have cemented relationships with large Chinese-based groups who are directly involved in supplying to cobalt end-users.
SH: Can you tell us a bit more about these partnerships?
MS: Our strategic partnerships, including our funding partnerships, are primarily European. One of our funders is the
European Bank for Reconstruction and Development and they, along with a European syndicate, have provided much of our project funding to date.
There is a really interesting geopolitical development happening between Russia and China in terms of cooperation over natural resource extraction and funding of those projects. This is evidenced by
Russia’s landmark 30-year, USD $40 billion deal to supply natural gas to China. In fact, one of the proposed pipeline routes would carry natural gas would link into China through the Altai Republic.
We are well positioned to really take advantage of that cooperation as the gas pipeline project will materially influence the economic development of the Altai region and provide infrastructure and raise investment appeal
Our having rights to Russian strategic resources has assisted our ability to attract strong funding opportunities out of China. In addition, we currently have a
working relationship in place with BGRIMM (Beijing General Research Institute of Mining and Metallurgy). They recently completed a site visit to the property and have the option of being the EPC contractor for the development of the Karakul Project. We were also able to successfully negotiate a preliminary off-take agreement with Easpring, one of China’s largest battery materials suppliers, counting Panasonic, Sony, BYD and many other global giants as end customers.
SH: What is the status of the project right now?
MS:
Wardell Armstrong International (WAI), a highly regarded engineering, environmental and mining consultancy firm
, just completed the initial
NI 43-101 technical report for the Karakul Cobalt Project.
We are extremely impressed with the robustness and continuity of the Karakul deposit as outlined in this resource report. The historically stated numbers were already very promising, and surpassing them with our first 43-101 report takes us that extra step forward and proves we are on the right track. Having a cobalt resource of this scale puts Global Cobalt in a strong position with investors and others for project advancement and future development funding.
SH: Are there any upcoming catalysts that readers should be aware of?
MS: Metallurgical test-work will be the company’s first priority now that we’ve completed and filed the initial resource estimate for Karakul.
Recent drilling has delineated a continuous structure, the Eastern Zone remains a high potential zone with down dip extensions to mineralisation. Within the Western Zone the mineralisation remains open at depth furthering the potential to enlarge the resource envelope.
As the company moves to more advanced stages of technical study, an Environmental and Social Impact Assessment in accordance with IFC Performance Standards will be required to highlight any sensitive receptors and to determine any impacts requiring mitigation.
We will also begin to work on the necessary environmental, permitting and social impact studies to comply with local Russian TEO Konditsy regulatory requirements and meet international fundraising and regulatory requirements.
SH: Thank-you very much for providing us with this informative update on Global Cobalt and how it relates to such an exciting strategic metals sector.
MS: My pleasure. I welcome readers of this to join our
special update conference call this Thursday July 10th at 10:30am PT. The number is 1 (888) 289-4573; Access Code: 8124285#. Also, please feel free to reach out to our Investor Relations team and
sign up for corporate alerts via our website www.GlobalCobaltCorp.com.
Full Disclosure: Global Cobalt is a Stockhouse client.