Given the expected boom in electromobility in the coming years, a real supply shortage of the essential battery metal cobalt and copper demand growth is expected, as reflected in the sharp rise in cobalt prices in recent years.
Kobaltexplorer could benefit enormously from this situation with the right projects and the right setup. One company that we believe could successfully jump on the Cobalt train is Australian Taruga Minerals, which until recently traded Taruga Gold.
They own the advanced Kolwezi Cliff project and the early-stage Lubumbashi Project. All properties are located in the resource-rich copper belt in the south of the Congo (Katanga).
Investment Case
Battery producers, car manufacturers as well as technology companies like Apple are vying for a safe source of the metal. In particular, Asian, especially Chinese corporations are sometimes very aggressive. And while the western world is focusing on opening up cobalt deposits outside the Democratic Republic of Congo - by far the largest cobalt producer - Chinese companies are even expanding their historically strong relations with the crisis-ridden African country.
In our view, Taruga has extremely promising cobalt projects in the Central African Copper Belt, which includes many of the high-grade cobalt and copper deposits typical of the Democratic Republic of the Congo. Particularly interesting are the projects Mwilu and Kamilombe in the area of the so-called Kolwezi "cliff". This area, which covers an area of 20 by 8 kilometers around the central city of Kolwezi, has some of the highest grade copper mines (open pit and underground mining) and high grade cobalt mineralization. The Kolwezi "cliff" has the largest cluster of deposits in the entire copper belt.
And Taruga has access to exceptional historical data and first exploration activity results on Kamilombe and Mwilu!Thus, for example, a historical - so not current standards - bore on Kamilombe 26.5 meters with 2% cobalt, 32.2 meters with 3% cobalt, 33.6 meters with 2% cobalt and 46.8 meters with 2% cobalt on. These are extremely high values, considering that cobalt deposits can be exploited profitably even from 0.1% (!).
Although there are no historical data available on Mwilu, initial sampling has yielded 0.7 meters with as much as 16.2% cobalt and 1 meter with 3.89% cobalt and 2 meters with 4.81% cobalt! In addition, active mini-mining can be observed on Mwilu, with high-grade cobalt mineralization being brought to light.
Now it's about validating and narrowing down that potential. And Taruga has already carried out the first drilling on both Mwilu and Kamilombe, the results of which are likely to be released in the next few days and weeks!
If these are similar in value to historical drill results or sampling results, we believe the stock could see a similar uplift as at the beginning of March, when the stock shot from $ .125 to .305 after announcing the acquisition of cobalt projects in the DRC.
Since then, the company's stock, which also has several other interesting exploration licenses in the Lubumbashi region, has been consolidated. Taruga shares are currently trading at AUD $ 0.19, which seems to us to be a favorable entry point considering the potential of the properties and the favorable location of the cobalt market.
Especially since Taruga just finishes financing, with the first, larger tranche at 0.21 AUD. Shareholders who would strike now would be cheaper than these investors. The second tranche of funding is expected to be completed by mid-July with a discount of 10% on the volume-weighted average price over the last ten days prior to the placement of the second tranche.
Taruga expects to have approximately $ 2.75 million in cash on completion of the financing. This would in any case finance the next exploration steps / drilling.
Overall, we believe that Taruga could become one of the beneficiaries of the supply crisis on the cobalt market.Considering the high cobalt content, the samples and historic drilling, we see significant potential for the company.Especially since Taruga also checks to take on Mwilu a reduction on a smaller scale, which could accelerate the development quite.
Taruga Minerals is certainly a high-risk bet, that should be clear. However investors, who are aware of this risk and can handle it, are offered here, we believe, a great opportunity to participate in the boom of electromobility or battery metals. It may be worthwhile for risk-conscious investors to think about a commitment before the drill results are known.
TAR Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
