Cobalt Blue makes strong progress in strategy of supplying high-quality cobalt to meet growing global needs

Cobalt Blue Holdings Ltd (ASX:COB) (OTCMKTS:CBBHF) (FRA:COH) continues to make strong progress with its integrated cobalt supply strategy centred on the flagship Broken Hill Cobalt Project (BHCP) with a global sample program set to produce first samples next quarter. These samples will be produced from a pilot plant which will be built established in Broken Hill by the end of this year and will use core from the BHCP. The company is hiring Broken Hill locals for the new plant with construction to be followed by a commissioning period with the first samples expected in February 2021. Following the pilot plant program, the company intends to scale this up a larger demonstration plant. COB has cobalt sample partners from Japan, Korea, India, Europe and Australia representing a strong selection of cathode precursor/battery makers, cobalt trading houses and mining companies. The proximity of the project to Broken Hill, the supporting rail line and road network as well as the availability of both power and water utilities to support future production. "Good progress" CEO Joe Kaderavek tells Proactive that it has been a year of good progress - delivering a vastly superior project with much lower costs and an increased life. Adding to the company's confidence is that the BHCP has recently been included in the Australian Government's Critical Minerals Prospectus 2020 and NSW Government's Minerals Strategy. Project update During the September quarter, the company released a major project update for the Broken Hill Cobalt Project. The highlights included a 55% increase in ore reserve from 46.4 million tonnes at 819 ppm cobalt to 71.8 million tonnes at 710 ppm cobalt with contained cobalt increasing 34% from 38,000 tonnes to 51,000 tonnes. Pre-production capital expenditure was lowered by around $70 million, inclusive of a 20% increase in annual front-end mining and concentrate throughput capacity from 5.2 million tonnes per annum to 6.3 million tonnes. Replacement of a standalone process plant tailings storage facility with an integrated waste landform for co-disposal of mine waste rock and process plant tailings has resulted in a lower environmental footprint. A production target was modelled consisting of 98 million tonnes at 690 ppm cobalt including the probable ore reserve and a partial component of the inferred resource. Engineering study As part of the project update, COB conducted a value engineering study examining the potential contribution of nickel to the project. Drill sample assays have shown that nickel is present in the mineral deposits. Metallurgical test-work reported that nickel will be recovered into the Mixed Hydroxide Product (MHP). While the study was not based upon a JORC 2012 resource or reserve estimate, it concluded that an MHP containing 7% nickel (and 38% cobalt) could be produced from processing samples of RC chips obtained from the mineral deposits. Further work is required to confirm the quantities of nickel (and other minor metals such as copper and zinc) in the mineral resource and ore reserve estimates. Optimisation opportunities Several key optimisation opportunities will be examined during the upcoming feasibility study: Capital cost reductions - Process Plant Engineering optimisation of rotary furnaces, dryer kilns, autoclaves and processing filters will be undertaken during the pilot and demonstration plant test-work. Further mining fleet/infrastructure capital (A$29.7 million) represents an opportunity for outsourcing to contractor-based operations and High Voltage power (A$35.5 million) capital represents an opportunity to engage in a Build Own Operate Model (BOOM) contract with an energy provider. Trade-off studies will be completed to evaluate the optimal capital cost versus operating cost scenarios; Metal recoveries - Design criteria used during the PFS 2018 and the Project Update 2020 Study was based on batch test-work. Larger scale testing will be conducted as part of the pilot and demonstration plant test-work, incorporating recycle streams, which may increase overall metal recoveries; Energy costs - Energy is 19% of annual site cash costs – related to electrical power consumption from the National Electricity Market. Piping Compressed Natural Gas (CNG) to site (feeding from the Moomba to Adelaide gas pipeline) will be examined as a lower-cost energy alternative. Further, diesel costs represent a significant 25-30% of total mining costs, which will be subject to further optimisation studies; Project life extension - Resource development work will be undertaken, this work may convert to additional ore reserves and, in turn, extend project life; and Inclusion of minor metals -  future resource estimation will include minor metals such as nickel, copper, zinc and manganese. Pilot plant During the quarter COB took delivery of a second tranche of equipment including gravity spirals, reactors, storage tanks, filters and processing pumps. The pilot plant, which will inform the Broken Hill Cobalt Project feasibility studies as well as supply cobalt product samples to the COB global sample partner program, will be modular and is planned to be sized upwards to a demonstration plant by the third quarter of 2021. NCMA cathode technology General Motors (GM) plans to introduce a new Nickel Cobalt Manganese Aluminium battery as the US carmaker expands its line of EVs, potentially lowering production costs. These Ultium batteries will be manufactured through a partnership with LG Chem at a 30GWh/yr facility that is expected to break ground later this year. GM’s joint venture with LG Chem, which is also a partner of COB, will aim to drive battery cell costs below US$100/kWh. The multinational corporation aims to sell 1 million EVs per year through 22 different EV models using Ultium energy options that will range from 50 to 200 kWh, and enable a GM-estimated range up to 400 miles ( around 640 kilometres) or more on a full charge. The technology is expected to roll out by 2025.