It may not (yet) boast the highest market cap in the burgeoning northern Ontario Cobalt Camp (that honor among Venture-listed companies still belongs to First Cobalt at $45 million prior to its official takeovers of Cobalt One and CobalTech), but upstart Castle Silver Resources (CSR, TSX-V) is nonetheless leading the district in other ways as reinforced again in a news release this morning:
-- CSR, fresh off a visit to Asia, has confirmed it’s in the process of filling requests from 4 Japanese metal trading companies for certain specifications of Cobalt hydroxide test products sourced from the Castle mine near Gowganda;
-- The Cobalt hydroxide will be a value added product created through CSR’s proprietary and 100%-owned Re-2OX process that was originally developed in conjunction with Canada’s National Research Council;
-- CSR announced this morning that SGS Lakefield has produced a 14.8% Cobalt concentrate from the recent mini underground bulk sample that was crushed to –10 mesh and blended for a homogenous sample that assayed 1.5% Cobalt, 46 g/t Silver and a stunning 5.7 g/t Gold (more on that below) – the 14.8% Cobalt concentrate now goes through the Re-2OX process;
-- CSR is the only junior in the area with critical underground access, a testament to the company’s history in the region and the investment of several million dollars into the Castle Property since 2011;
-- CSR is the only Cobalt focused junior in the district currently drilling with a recently expanded Phase 1 program from surface;
-- Preparations continue, as confirmed this morning, for the next phase of drilling which will be from underground;
-- CSR also owns the Beaver and Violet past producers near the town of Cobalt – the Beaver, which was one of the last operating mines when the region shut down around 1990 due to low Silver prices, was famous for its incredibly high-grade Silver (>100ounces per tonne) from the deepest shaft in the region in the early 1900’s. A BMR site visit has confirmed there is considerable untapped Cobalt potential at Beaver where a work program is now in progress.
The significance of the breakthrough in Asia, the first step toward building a potential customer base for value added Cobalt products in that region, was highlighted by CSR President and CEO Frank Basa in this morning’s news release:
“I’m excited about how we’re advancing our Cobalt strategy for the battery sector, moving closer to filling a request for client specific test samples of Cobalt hydroxide sourced from the Castle mine and created through our 100%-owned Re-2OX process,” stated Basa.
“While in Asia, besides our dealings in China and with some large metal trading companies in Japan, we met with officials from a Japanese car manufacturer that produces electric vehicles. Cobalt’s critical role in electric vehicle batteries is going to drive even greater demand for Cobalt product. As an innovative leader in the northern Ontario Cobalt-Silver Camp, CSR is aggressively implementing its action plan to seize exciting opportunities in the growing Cobalt sector,” Basa concluded.
CSR clearly has first-mover advantage in terms of Cobalt recovery in the district given its underground access combined with its unique Re-2OX process that solves metallurgical issues in the region going back more than a century. In addition, the company is exploring opportunities using Re-2OX in the recycling of metals from Lithium-ion batteries – more innovation from a company that has raised $2.6 million in hard dollar financings the last 4 months and whose market cap is still a modest $10 million. The stock is up more than 200% for the year. They’re doing something right!
There’s GOLD In Them Thar Cobalt Hills!
So what’s with the 5.7 g/t Gold assay CSR reported last week from that mini bulk sample taken from a vein on the first level of the Castle mine within the upper part of the Nipissing diabase? Additional material from underground is being analyzed, so we should hear more in the near future. Keep in mind, despite this district’s prolific history of mining, much has yet to be learned and there are sure to be many pleasant surprises. Historically, Castle was never assayed for any metals other than Silver.
Last week, another company we like a lot, Cobalt Power (CPO, TSX-V), found Gold in a fascinating new surface discovery that was hiding under several feet of overburden at its Smith Property contiguous to the past producing Deer Horn mine near the town of Cobalt. Channel sampling of a vein in Archean volcanics returned 12.5% Cobalt, 5 g/t Gold, 82 g/t Silver and 0.53% Nickel. BMR visited this discovery area last week, featuring impressive structure and a swarm of veins approximately 800 m southeast of the Smith shaft, and the market has underestimated the significance of this in our view. Approximately 4,000 sq. m surrounding the zone have been cleared and work is continuing so that detailed mapping and systematic channel sampling can be carried out in advance of drilling. Assay results for 9 holes completed elsewhere at the Smith are pending. Vein structures and interflow sediments follow onto the property from the Deer Horn.
Exceptionally high-grade Silver became the main focus of miners after the first big Silver discovery in Cobalt in 1903, though a primary Cobalt deposit (Agaunico) with Silver, Nickel and Copper by-product was mined for several decades (4.4 million pounds of Cobalt) beginning in 1904. Over 100 Silver mines quickly emerged as the Cobalt area became the birthplace of Canadian hard rock mining and one of the world’s largest Silver producing regions with officially more than half a billion ounces hauled out of the ground (at least 750,000 ounces unofficially, according to sources).
Great wealth was created, but there was “tunnel vision” (understandably) regarding Silver at the expense of other metals. Gold was not obvious at surface like it was elsewhere in northern Ontario, so those hunting for the yellow metal pursued their dreams in places like Kirkland Lake and Timmins, while Cobalt was plentiful but miners weren’t too interested in it back then. Cobalt, of course, now has huge new importance in today’s technology driven world, and it has the potential to turn a large part of northern Ontario into a spectacular new area play with juniors chasing after not only Cobalt but Silver, Gold and base metals underlying a richly textured geological landscape.
Investors who identify the best juniors in this district now could be in for some explosive returns given the history of wealth creation in this region and the powerful new dynamic of Cobalt that companies like CSR, First Cobalt and Cobalt Power are harnessing.
Note: John, Jon and Daniel hold share positions in CSR. Jon also holds a share position in CPO.