Cobalt this week gained $1,000 to $54,750 per tonne. After finishing October 21, 2016 at $28,000 per tonne, cobalt has finished 23 consecutive weeks without a decline – for a gain of 95.5%!
At no time in history has any other commodity gained for 23 straight weeks. The previous record for a commodity was set in 1973. Between April 8, 1973 and August 12, 1973, lean hogs rose for 18 straight weeks from $0.3477 per lb to $0.616 per lb for a gain of 77.2%.
This past Monday, NIA announced Scientific Metals Corp (TSXV: STM) at $0.60 per share as its #1 Cobalt stock suggestion – predicting that it could double or triple in the short-term! Since NIA’s announcement, STM has gained 18.33% to finish this week at its all-time high and key breakout point of $0.71 per share! If STM surpasses $0.71 on Monday, we expect it to rapidly explode towards $1!
Tesla (TSLA)’s lithium-ion battery Gigafactory in Reno, NV is beginning to ramp up production in anticipation of its Model 3 production to launch in July 2017. TSLA intends to produce 5,000 Model 3 vehicles per week by year-end 2017 and reach production of 10,000 per week sometime in 2018.
In 2016, soaring lithium prices led to a lithium exploration boom – with 2016 lithium production from mining increasing 11.11% over 2015. Lithium isn’t the only metal used in TSLA’s lithium-ion battery cells. The most expensive component of a lithium-ion battery cell is its cathode, and cobalt cathodes offer the world’s highest energy densities. Cobalt is the most expensive raw material used in TSLA’s battery cells and accounts for 35% of cathode production costs.
Although it is easy to develop new lithium mines as prices rise, 97% of the world’s cobalt production comes as a by-product of either copper or nickel mining. In 2016, copper and nickel prices experienced a dramatic decline – causing many mines to suspend operations. As a result, 2016 cobalt production declined by 2.38% from 2015 – at a time when cobalt demand for electric vehicles was beginning to explode, causing a massive cobalt shortage.
Adding further upward pressure to the current cobalt meltup is the fact that 54% of the world’s current cobalt production comes from Democratic Republic of Congo, where militia fighters decapitated 40 police officers last week. An estimated 40% of Congo’s cobalt production is currently coming from illegal artisanal mining – with thousands of children being forced to mine for cobalt. It has become a major political issue in the U.S. with human rights groups protesting U.S. corporations to suspend cobalt imports from Congo.
Earlier this year, a report was published in the media exposing how Apple’s lithium-ion battery suppliers were using cobalt that was supplied to them by Zhejiang Huayou Cobalt, the largest buyer of cobalt from artisanal miners in Congo. An investigation traced Apple’s cobalt supply chain all the way to children as young as seven who were being forced to mine for cobalt by hand in harsh, dangerous conditions. Americans were outraged to learn that their smartphones were being powered by modern-day slaves and African child labor.
Last month, Apple responded to its public relations crisis by halting cobalt purchases from Congo artisanal mining. As more companies begin following Apple’s lead and cutting off cobalt supplies from artisanal miners in Congo, it will effectively remove 21.5% of global cobalt supplies from the market – thereby multiplying the severity of the current cobalt shortage and meltup in cobalt prices! Tesla has already promised that its cobalt will be sourced exclusively from North American mines.
When investing into a cobalt mining/exploration stock, it is important to stick with companies developing primary cobalt mines. Currently, the world has only one primary cobalt mine that is in production – and it is located in Morocco and owned by the King of Morocco.
Scientific Metals Corp (TSXV: STM)’s Iron Creek is a primary cobalt project located in the most prolific trend of cobalt mineralization in the United States, the Idaho Cobalt Belt. The Iron Creek Cobalt Project covers 1,800 acres in 90 lode mining claims.
Historical resource estimates completed by Noranda Exploration in the 1980s indicated that the Iron Creek Cobalt Project contains 1,279,000 tons grading an average of 0.59% cobalt for a contained cobalt resource of 7,546 metric tonnes with excellent potential for expansion. With cobalt at $54,750 per tonne, STM’s historical cobalt resource is worth an estimated $413.14 million and STM intends to fast track exploration/development to bring its historical resource up to NI 43-101 compliant resource.
STM has just commenced a work program to rehabilitate the portals leading to three underground tunnels which currently have a combined length of 1,500 feet and access the mineralized zones. After rehabilitating the underground workings, STM plans to conduct extensive underground sampling and drilling, with plans to extract a bulk sample for metallurgical testing. STM plans to follow up its underground exploration program with surface core drilling to confirm previous results from 30,000 feet of historical diamond drilling.
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. NIA has been compensated by STM $40,000 cash for a two-month investor relations contract. Never make investment decisions based on anything NIA says. This message is meant for informational and educational purposes only and does not provide investment advice.