Australia is one of the world’s top mineral producers, churning out large quantities of key commodities, including uranium, coal, gold, bauxite, iron ore and copper.
But in addition to these staple commodities, Australia is also home to significant amounts of around 400 other different minerals, including the world’s second-biggest cobalt reserves.
As the majors, such as Rio Tinto, BHP Billiton and Peabody, tend to dominate production of the core commodities, the more risk tolerant junior minors are increasingly going after the so-called ‘battery minerals’ – cobalt, lithium and nickel – the demand for which is expected to explode as electric vehicles grow in popularity.
This is part of a wider global trend that is seeing investors financing more specialised commodities.
“We are increasingly financing ‘battery’ metals and industrial commodities,” says John Meyer, partner at SP Angel.
“We have had several approaches by Australian miners and explorers for listing in the UK to access the deep pool of finance in London,” he adds.
So, which companies are making waves in this niche commodities sector and what business approach are they taking?
Cobalt Blue Holdings: Thackaringa Cobalt Project, New South Wales
Self-labelled ‘green energy exploration company’ Cobalt Blue Holdings (CBH) owns 100% of the Thackaringa cobalt-pyrite sulphide project in New South Wales.
According to CEO Joe Kaderavek, the project is a “globally unique primary cobalt mine and integrated refinery” that will become a significant, low cost, long-life supplier of battery-ready cobalt sulphate. It is expected to have low operating costs due to the ore type and a new processing method using gravity separation.
Kaderavek says that while cobalt presents unique challenge in terms of financing, as banks are more reluctant to lend against non-exchange added commodities, the firm has in place “both a financing and commercial programme to create the necessary enabling partnerships.”
It already has a strategic partnership with LG International.
In July, CBH said a pre-feasibility study “clearly demonstrated the ore reserve case for Thackaringa was positive and that the project was economic”, adding that there is an estimated 46.3 million tonnes (mt) at 819 ppm cobalt. It estimates production to start in 2022.
Despite the challenges, Kaderavek is positive for the future demand of cobalt.
“My long-term views on cobalt remain unchanged, the market balance will remain tight with the market needing more and more cobalt units to keep up with future demand,” he says.
Along with Thackaringa, CBH recently announced a Memorandum of Understanding with CuDeco Limited to monetise the cobalt-pyrite concentrate produced from the flotation concentrator circuit at the company’s Rocklands project. It also has four prospecting licences in Cameroon.
Australian Mines Limited: Sconi Project, Queensland
Australian Mines Limited’s (ALM) 100% owned flagship Sconi project is expected to deliver an annual average production of 3,010t of cobalt sulphate, 24,420t of nickel sulphate and 77t of scandium oxide for at least the first 20 years.
According to AML, the project is one of a very few large ore bodies of its type in Australia, as well as one of the most advanced towards production. To date, it holds all relevant mining and environmental licences and is currently undergoing a bankable feasibility study. In June, a 50,000m mineral resource expansion drilling programme got underway.
In February, the firm signed an off-take agreement with leading global electric vehicle battery manufacturer SK Innovation for 100% of the cobalt and nickel production from Sconi for a seven-year period.
On signing the deal, AML’s managing director Benjamin Bell said it shows that “Australian Mines is unequivocally a leader in Australia’s cobalt sector.”
Notably, in September, the firm received a financial boost through a significant $12m investment agreement with Bergen Asset Management.
Furthermore, the company was recently lauded in the Deloitte Western Australian Index 2018 for having increased its market capitalisation by 643% from A$32m to A$238m.
The report notes AML was bolstered by the breaching of the A$100m market capitalisation threshold and by the offtake agreement.
Tungsten Mining NL: Mt Mulgine, Big Hill and Kilba Projects, Western Australia
In 2015, Tungsten Mining (TM) decided to take a strategic position on its namesake commodity, swiftly moving to establish a portfolio of advanced development projects. Today, it has control of a ‘massive inventory of contained metal’, representing more than 15.6 metric tonne units (mtu) of tungsten trioxide.
These include the Mt Mulgine, Big Hill and Kilba Projects, all in Western Australia, as well as a processing plant that has an installed capacity of 30tph with increased capacity potential.
The company’s strategy has been supported by a huge surge in the price of tungsten, which saw a year-on-year increase of over 50% on 30 June 2018, according to Deloitte.
Furthermore, low mining costs from near surface mineralisation and low strip ratios, as well as simple metallurgical recovery and processing route, has made the company attractive to financiers.
In its Western Australia (WA) report, Deloitte noted that the company increased its market capitalisation by 3,141.1% from A$4m to A$320m during the year ended 30 June 2018, and was ranked 44th in its WA Index – a top mover in the top 100 by market capitalisation.
Earlier this year, TM announced it had received the required state and federal environmental approvals relating to the Mt Mulgine tungsten project, as well as the purchase of a modular processing plant. According to Deloitte, these early developments reinforced the company’s intention and ability to meet its goal of first concentrate production in late 2018.
Ardea Resources: Goongarrie Nickel-Cobalt Project, Western Australia
Ardea is the 100% owner of the Goongarrie Nickel-Cobalt Project, which the company claims is the “largest cobalt resource in the developed world”.
In March, it updated the project’s resource estimate to 83.1mt at 0.10% cobalt; 0.81% nickel for 81,700t of contained cobalt; and 672,300t of contained nickel.
According to the company, Goongarrie and the encompassing Kalgoorlie Nickel Project (KNP) is a strategically valuable asset that has already had A$50m spent on it by multiple significant resource companies.
Despite a bumpy share price in 2018, in part due to fluctuating cobalt prices, investors, such as Matt Bohlsen writing for Seeking Alpha, have said the company remains “very appealing”. Its current market capitalisation is estimated to be A$121m.
In June, Ardea announced that KPMG would be the miner’s strategic corporate advisor. Following this announcement, the company added that it had received “positive enquiries from interested parties including industrial conglomerates, battery manufacturers, automakers, trading houses, mining houses and others”.
This has led to speculation it will announce a new strategic partner by the end of the year, which, along with the A$19m working capital position of Ardea, will put the company in good standing.
Artemis Resources: Pilbara Western Australia
Artemis has been aggressively exploring for base, battery and precious metal deposits across the West Pilbara.
The company holds 2,600km2 of tenements in the region and has the only available base metal and gold processing plant in the heart of conglomerate gold country, according to the firm. Projects under its remit include: Carlow Castle, copper, zinc and cobalt at Whundo, and the Radio Hill nickel/copper/cobalt deposits.
In August, the firm announced it had met the condition to complete a 70% interest in the Munni Munni Project in the West Pilbara for A$750,000 expenditure. The project is contiguous to Artemis tenements on all sides and is located 20km from the company’s 100% owned Radio Hill processing plant.
Shortly after, in September it announced results from reverse circulation drilling at its Carlow Castle project in the West Pilbara. Highlights included high-grade gold, cobalt and copper assays continuing to be delivered, along with a new high-grade cobalt zone being identified.
At the time the company said: “the strong hits across the eastern end of Carlow continues to support our view that a much larger system is at play.”
Artemis is more early stage and its resources are not yet fully defined. However, the company says it continues to seek strategic joint ventures with partners such as Novo Resources, Platina Resources, Blackrock Minerals and Northern Star Resources. Its market capitalisation recently cracked the A$100m mark.