Artemis Resources confirms Carlow Castle is a cracking cobalt project
Investors who jumped into Artemis Resources (ASX:ARV) on the ground floor in mid-January found at the start of this week that they were sitting on a near 10 bagger as the company’s shares hit an intraday high of 15.5 cents, up from 2 cents on January 16.
This occurred only a few days ahead of the release of drill results at the group’s Carlow Castle project located in close proximity to Karratha in Western Australia. The results received the stamp of approval when the market opened on Wednesday morning with the group’s shares surging 18%.
Interest in ARV has certainly been accentuated by the company’s exposure to cobalt, the metal of the moment, and based on most analyst’s projections the anticipated highflyer that will take over from lithium in 2017.
It should be noted that broker projections and share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
However, ARV isn’t just a play on cobalt. There are several other factors that place it head and shoulders above its peers, suggesting that the recent share price accretion is still yet to be captured in the share price.
Drill results indicate potential commercial viability of a multi-commodity project
Initial assay results from RC drilling at Carlow Castle have returned promising grades across cobalt, gold and copper. It is worth bearing in mind that results from another 21 holes across a 1.5 kilometre strike are still to be released, potentially providing further share price momentum.
With regard to the two assay results released today, they included 2 metres grading circa 1.4% cobalt, 5.2 grams per tonne gold and 4.2% copper. This was sourced from relatively near surface mineralisation.
ARV also provided XRF results (on-site, pre-lab, less precise indicative testing) for three subsequent holes. Assay results for these three holes should be released next week.
The most impressive indicative XRF results included 6 metres grading 1.3% cobalt and 2.1% copper from 48 metres and 4 metres at 1.1% cobalt and 6.1% copper from 63 metres. Importantly, multiple zones of massive sulphide cobalt mineralisation were intersected in the course of drilling.
Good grades, great address and established infrastructure
In discussing the drill results, ARV’s chairman David Lenigas was equally upbeat about the gold and copper side of the story as he was cobalt, saying “Not only are these cobalt results significant from a global perspective, but they clearly demonstrate the cobalt potential of this project, especially when combined with the high grades of gold and copper”.
Lenigas was also buoyed by the early identification of multiple parallel lodes of cobalt mineralisation.
The issue of ‘conflict cobalt’ also came to the fore as this has a significant impact on the supply demand dynamics for the metal. On this note, Lenigas said, “A great deal of the world’s cobalt currently comes from the Democratic Republic of Congo (DRC) which, in many circles is regarded as conflict cobalt due to the amount of child labour employed in its mining”.
He is of the view that many end-users can’t or won’t buy conflict cobalt (in a sense similar to the ‘blood diamond’ story) in the current environment due to issues such as the use of child labour.
Consequently, the establishment of a commercially viable multi-commodity cobalt project in a mining friendly jurisdiction should work in the company’s favour.
Acquisition of Fox Resources mining, plant and assets provides easy path from exploration to production
The imminent acquisition of Fox Resources’ Radio Hill operations (including JORC 2004 and 2012 compliant resources of nickel, copper and zinc), located 35 kilometres south of Karratha and 20 kilometres from the Carlow Castle project is a significant development for ARV in terms of making the transition from explorer to producer.
The cash and share payment for the acquisition equates to a value of $4 million. Management estimates that building the 425,000 tonnes per annum plant alone would likely cost at least $50 million, but potentially as much as $100 million, particularly when placing a value on the necessary funding requirements and time constraining factors such as permitting.
At a time when many new entrants in the hyped up cobalt space are just scratching the surface, ARV is shaping up as a company that could quickly establish a JORC 2012 compliant resource with subsequent studies and decision to mine simplified by the fact that it has access to a fully funded ‘ready to process’ plant.