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 September 26, 2013
Cobalt Prices on the Rise Following Summer Slowdown
    Publisher: Cobalt Investing News
    Author: Charlotte McLeod

 
THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
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Cobalt Prices on the Rise Following Summer Slowdown

Cobalt prices are not what they once were, Metal Bulletin recently reported, but that doesn't mean investors should consider the metal a lost cause. In fact, September has been treating cobalt fairly well.

As August drew to a close, prices for low-grade cobalt began a "rapid turnaround," rising from a four-month low of $11.45 to $13 per pound to $12.10 to $13.75 per pound. Meanwhile, high-grade cobalt stabilized at $12.40 to $14.20 per pound.

Metal Bulletin notes in an August 30 article that the uptick was the result of expectations of rising demand in September. "Basically, it's going up into September. People are starting to cover in for the end of the year. There's a little more demand from our customers," one consumer told the news outlet...

(to read the full article please click here to visit CobaltInvestingNews.com)

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
 
 September 23, 2013
The US$12 Million Sale Of The Sunshine Refinery Could Be The Icing On A Very Lucrative Cake For Formation Metals
    Publisher: Minesite.com
    Author: Ryan Jackson

 
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The US$12 Million Sale Of The Sunshine Refinery Could Be The Icing On A Very Lucrative Cake For Formation Metals

It's no surprise, given the condition of the mining markets, that a great many assets are up for sale as mining companies attempt to monetize non-core assets to secure precious capital.

The majors have made headlines for a number of ill-conceived acquisitions made at the peak of the market which have become black holes for capital and offer few prospects of salvation.

But not all companies seeking to divest assets are in the same boat.

Formation Metals is a case in point.

The company is now selling its Sunshine Refinery in Idaho, but only after a very good run.

Sunshine has been an extremely profitable endeavour right from the get go and, over the years, has provided the company with operational cash flow. "We paid US$1.275 million for the refinery and a few years later we sold the tailings pond for US$4.6 million", explains Formation's Rick Honsinger.

At first, the plan was to retrofit the facility to process concentrate produced at Formation's flagship construction-stage cobalt project, the Idaho cobalt project.

However, technical optimization studies determined that a new, purpose built facility would be far more effective in that role.

Nonetheless, the refinery was successful in refining into bullion high silver content material.

"Since the commencement of commercial operations in 2007, the refinery did report total positive earnings of close to C$3 million. The whole refinery has turned out very cash positive from a relatively modest initial investment", says Rick.

Of late though, it's been a different story. "The refinery has been finding it difficult to get enough material in the front door to get the capacity up to a point to justify the operational expenditures", says Rick.

The refinery ceased to be profitable for Formation in 2012. But the proposed sale would bring in US$12 million for the company taking the grand total income from the endeavour to US$18.325 million, all from an initial investment of US$1.275 million.

But regular readers of Minesite will know that this latest agreement is Formation's second attempt to sell the refinery this year, and follows a period of negotiations with Waterton Global Resource Management which ended at an impasse.

Negotiations with Waterton were protracted and as they went on silver retreated from around US$30 an ounce to below US$20. That was disappointing.

But the new offer, says Rick, is "superior and we're happy to entertain it".

"While we were dealing with Waterton we were under exclusivity with them and that's why we couldn't entertain any other offers, but as soon as that deal was no longer part of the picture we were able to negotiate with Sunshine Silver Mines."

For Sunshine Silver Mines, the acquisition of the Sunshine refinery is a natural move. The refinery was originally built to service Sunshine Silver's nearby Sunshine mine.

"We always knew we would be doing something with them in one form or another", says Rick. "We were hoping to have them as one of our major clients when we were in operation but at this point it makes sense for them to acquire it outright."

US$500,000 is already in escrow and is non-refundable in the event that Sunshine Silver Mines breaches the contract and causes the sale not to conclude, a clear statement of intent.

The first order of business, when or if the US$12 million is received, will be to clear Formation's corporate debt. "There's a US$5 million convertible debenture due at the end of October", explains Rick. "It is a priority to get that paid down."

US$12 million is not enough to complete the remaining construction at Formation's flagship Idaho Cobalt Project, which remains ready for underground development. But the funds will leave Formation debt-free and in a good position to search for additional opportunities.

"What the US$12 million does is give us the opportunity to have another look at some of our existing assets as well as other opportunities that arise in these challenging markets", explains Rick.

Though the Idaho cobalt project has been Formation's focus in recent years, the company does hold a strong portfolio of exploration assets.

Little work has been done recently at these projects since the majority of funds raised by Formation were earmarked for the flagship cobalt project.

But this new capital injection could be applied more broadly while management waits for mining markets improve to the point where finance for Idaho once again looks realistic.

These additional projects offer the company a diversified commodity portfolio. One of the most exciting is Formation's two per cent interest in the Virgin River uranium project in the Athabasca Basin.

"We own a small percentage but it's considered a major project in Northern Saskatchewan with the right joint venture partners, Cameco and AREVA", explains Rick.

Work to date has focused on the Centennial deposit at Virgin River which was discovered in 2004 and is similar to the mineralization at McArthur River. Cameco intends to identify, through further drilling, the scope of the Centennial deposit along and across its 650-metre identified length and determine the economic viability of the deposit. Additionally, Cameco plans to drill regional exploration targets outside the current defined deposit.

The company also owns or holds options on four gold and silver projects in North America. Rick points to the El Milagro Project in Tamaulipas State, Mexico as potentially interesting for the company. Historical data shows that silver grades at El Milagro reach bonanza levels often in excess of two kilograms per tonne and combined lead-zinc grades usually exceed 10%.

But what about the cobalt project?

Though project financing is exceptionally scarce in the current market, cobalt itself has been a strong performer in 2013.

"Cobalt outperformed the majority of other commodities", points out Rick. "The asking price for aerospace grade cobalt metal has risen over 40 per cent from its lows in December through to this September."

In the meantime, Formation will continue to keep the Idaho cobalt project up to date in its permitting while maintaining a construction-ready stance at the mine site.

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 September 20, 2013
Firmness in Western Cobalt Prices Remains
    Publisher: Metal Pages
    Author: John Evans

 
THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
- FOR THE INFORMATION OF SHAREHOLDERS AND INTERESTED PARTIES ONLY -

Firmness in Western Cobalt Prices Remains

SÃO PAULO (Metal-Pages) 20-Sep-13. Recent firmness on Western cobalt markets has continued to be underpinned by renewed interest since end of August, as the mating season for long term contracts approaches, which could turn out a strong determining factor on spot market prices in the months ahead.

High grade material continues to change hands in a range between $14-15/lb with Sumitomo and Jinchuan material said to be fetching somewhere in the middle of that range and Falconbridge being offered around the top. "Sumitomo, Jinchuan, Vale and Falconbridge seem to have cleaned out the cupboard for two months so any consumer that needs high grade for the next two months can only buy from trade," said a trader. One US trade source said there is little spot business around, though every now and then enquiries for small tonnages appear. Click here for the full story

 
 September 10, 2013
Global Cobalt Demand to Hit 115,000 Tonnes by 2017
    Publisher: Metal Bulletin via Cobalt Investing News

 
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Global Cobalt Demand to Hit 115,000 Tonnes by 2017

MetalBulletin reported that according to Glencore Xstrata plc (LSE:GLEN), between this year and 2017, the global cobalt market will shift from surplus to deficit.

As quoted in the market news:

" Global demand for cobalt will reach 111,500 tonnes by 2017, up from 88,100 tonnes in 2013, according to the company."

(to read the full article please subscribe for a free trial membership to MetalBulletin.com)

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 September 06, 2013
Cobalt Prices Jump on Downstream Hopes
    Publisher: Metal Bulletin

 
THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
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MetalBulletin.com - September 6, 2013

Cobalt Prices Jump on Downstream Hopes

Cobalt prices jumped towards the end of the week, as a rally, largely fuelled by anticipated increased demand from the battery sector.

Reaching its highest point since July, low-grade cobalt was trading at $12.90-14.30 per lb on Friday September 6, up from $12.50-14.00 previously. Low-grade cobalt has surged in recent weeks, since plunging to a summer low of $11.45-13.00 on August 21. High-grade cobalt hit $13.20-14.80 on Friday, up from $12.60-14.40 on Wednesday September 4, after European buyers were...

(to read the full article please subscribe for a free trial membership to MetalBulletin.com)

Metal Bulletin Trial Membership

 
 August 22, 2013
Chinese Cobalt Metal Prices Stable, Participants Bullish
    Publisher: Metal Pages
    Author: Virginia Wang

 
THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
- FOR THE INFORMATION OF SHAREHOLDERS AND INTERESTED PARTIES ONLY -

Chinese Cobalt Metal Prices Stable, Participants Bullish

BEIJING (Metal-Pages) 22-Aug-13. Cobalt metal prices in China are stable this week with most industry sources optimistic about market outlook in September even though European prices fell again. Click here for the full story
 
 August 21, 2013
Global Cobalt Launches Russia Drilling Campaign
    Publisher: Metal-Pages
    Author: John Evans

 
THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
- FOR THE INFORMATION OF SHAREHOLDERS AND INTERESTED PARTIES ONLY -

Global Cobalt Launches Russia Drilling Campaign

SÃO PAULO (Metal-Pages) 21-Aug-13. Global Cobalt says it has started a fully funded drill and technical work programme at the Karakul cobalt Project in the Altai Republic of Russia.

The aim of the six month programme, including a 7,200-metre drilling campaign and scoping study is to validate Soviet-era resource data, expand the area included in the current mine permit and increase the metallurgical understanding of the project, the company said in a statement

Last month, the company closed a previously announced earn-in deal with Imperial Mining Holding (IMHL) to acquire up to a 100% stake in the Altai cobalt properties.

In June, Global Cobalt President & CEO Eric Chutter told Metal-Pages that the project could come online when cobalt prices are at higher levels in the years ahead and that the company could be in a position to make a decision on production twelve to eighteen months after the scoping study. -By John Evans in São Paulo (john@metal-pages.com) Click here to read the full Press Release

 
 August 13, 2013
Cheaper, More Sustainable Solar Cells from Cobalt
    Publisher: Cobalt Investing News
    Author: Charlotte McLeod

 
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Cheaper, More Sustainable Solar Cells from Cobalt

In the past few weeks, solar power has gained attention due to its potential as a significant new source of demand for silver. Now, new findings from a research team at Switzerland's University of Basel indicate that cobalt may also be set to see demand from that sector.

The team, headed by Ed Constable and Catherine Housecroft, both chemists at Basel, has succeeded in replacing the iodine used in copper-based dye-sensitized solar cells (DSSCs) with cobalt, according to Nanowerk. The discovery is expected to eventually enable the manufacturing of cheaper, more environmentally friendly solar cells.

Dye-sensitized solar cells

As CleanTechnica explains, DSSCs are a type of solar cell "that works by capturing sunlight via a colored dye, which then, through an electron transfer process, produces electrical current. Electrolytes function as the electron transport agents."

Normally, iodine and iodide are the electrolytes, but, as mentioned, the Basel chemists have been able to replace those materials with a cobalt compound.

Dexter Johnson of IEEE takes the explanation of DSSCs a little further, stating that the technology "produces a photovoltaic cell that is relatively inexpensive compared to its silicon cousins," though it "cannot produce the same level of energy conversion efficiency as silicon solar cells."

Benefits of Cobalt

There are two main benefits to using cobalt, not iodine, in DSSCs, the researchers believe.

The first is that compared to iodine, cobalt is much more abundant. Johnson quotes Project Officer Biljana Bozic-Weber as saying, "[i]odine is a rare element, only present at a level of 450 parts per billion in the Earth, whereas cobalt is 50 times more abundant." As a result, cobalt is a much more sustainable material to use.

Secondly, using cobalt rather than iodine should improve the lifespan of DSSCs, which IEEE notes, "have been criticized for their short lifespans." In copper-based DSSCs, copper and iodine react, creating copper iodide, which degrades the DSSC.

What's Next?

As is often the case with new technology, there is still much work to be done before the Basel researchers' work will see commercialization outside niche markets.

However, the team thinks that through a new approach called molecular systems engineering, which Constable describes as integrating and optimizing "all molecular and material components of a system ... to approach new levels of sophistication in nanoscale machinery," they will be able to gradually move forward.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

 
 August 12, 2013
Metal-Pages Research's specialty alloy price index hits new lows in July
    Publisher: Metal-Pages

 
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Metal-Pages Research's specialty alloy price index hits new lows in July

LONDON (Metal-Pages) 12-Aug-13. The weakness of the markets is clearly highlighted in our Specialty Alloys Price Index (SAPI). This index gives equal weight to the four commodities -- Co, Cr, Mo and Ni -- rather weighting according to the total value of the individual markets, a method that is commonly used in other commodity indices.

Metal-Pages Research believes the SAPI provides a good indicator of underlying price trends that are affecting the whole of the sector. The index (January 2010 = 100) recorded a high of 125.6 in April 2010. Since then, the index has given up all of its gains and the decline in the SAPI has accelerated in recent months.

The SAPI began the year at 82.0 and has generally been under pressure since then falling to a low of 74.9 in July. Nickel and molybdenum contributed to the bulk of the decline in the early part of the year; then the fall in ferro-chrome prices added to the weakness in the index.

The decline in July was limited by the bounce in cobalt prices. The July average for the index stood at 74.9 compared to 79.1 in June and 82.8 a year earlier. The average of the index year-to-date was 13.9% down on the corresponding period of 2012.

Weak demand and no supply response brings about predictable response

In Metal-Pages Research's (M-PR), regular report on the sector (The Specialty Alloys Market Briefing), we detail the latest developments in the individual markets. Nickel and molybdenum have registered the largest declines seen so far this year.

However, even cobalt, which has in our view the best underlying fundamentals, has not been immune to the decline in prices with the 99.8% quote falling to a low of $11.75/lb during the second quarter. Nevertheless prices bounced back in July to over $15.00/lb on supply concerns.

There are no similar supply concerns in other markets and the dominant force in pricing has been the seasonal and, more importantly, weak underlying fundamental demand.

One problem facing the specialty alloy sector is that the price decline seen earlier this year has come about despite earlier y-o-y gains in stainless steel output (concentrated in China + 16.2% y-o-y). According to the International Stainless Steel Federation (ISSF), global production expanded by 5.2% y-o-y in Q1 to 9.38m tonnes.

However, output in all other regions registered y-o-y falls. The high level of total production has had an impact on stainless steel prices. For example, the base price in Europe is currently around €1,050/tonne, largely unchanged so far this year.

The inability to push through increases to the base price highlights the underlying weakness in the market. Both the stainless mills and the specialty alloy producers also have to cope with falling alloy surcharges, which inevitably encourages destocking down the supply chain.

Also, more recently, there is the pronounced seasonal slowdown in the European and, to a lesser extent, North American markets.

The anecdotal evidence that Metal-Pages Research receives, together with second quarter company results, reinforce the weak market conditions. The general theme for the rest of the year is likely to be one of producer restraint as they try to boost margins i.e. lift base prices. M-PR expects negative y-o-y, or flat, growth in stainless steel output in Europe and in the Americas during the rest of the year.

Production will probably continue to expand in China given the massive over-capacity in the country. However, the increased alloy demand within China is being met by local suppliers. The bottom line is that there could be further declines in the SAPI in the short term.

Details of Metal-Pages Research's quarterly supply-demand balance and price forecasts out to the end of 2014 for -- Co, FeCr, Mo and Ni -- are given in The Specialty Alloys Market Briefing. This research service also provides market outlooks under three different scenarios.

To receive a copy of this report contact: info@metal-pages.com.

 
 August 07, 2013
Cobalt: the "stand out" specialty alloy metal
    Publisher: Metal-Pages

 
THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
- FOR THE INFORMATION OF SHAREHOLDERS AND INTERESTED PARTIES ONLY -

Cobalt: the "stand out" specialty alloy metal

LONDON (Metal-Pages) 07-Jul-13. Cobalt prices have generally outperformed the other specialty alloy metals so far this year. Compared to the other alloys that Metal-Pages Research analyses in its new monthly service -- The Specialty Alloys Market Briefing (see below for details), cobalt is the only specialty alloy metal where prices are higher than they started the year ($10.85/lb). Prices in early July touched $15.00/lb.

Despite its superior fundamentals, cobalt has not been immune to the bearish sentiment that is currently pervading the specialty alloy sector (and most other industrial commodities). The price for 99.8% material in early August is being quoted at $13.50/lb.

However, Metal-Pages Research believes that the cobalt market is well positioned from a fundamental standpoint to benefit from the expected acceleration in economic growth as 2013 develops and into 2014.

The supply side stands out with limited production gains

In the other specialty alloys markets, there has been a sharp rise in production and a typically price inelastic supply response to both weak demand and prices. For cobalt, most aspects of the fundamentals are more positive. On the demand side, cobalt has benefited from its more diverse end user base, given that it is not reliant on the stainless steel market.

However, It is the probably the supply side where the differences are greatest. According to Cobalt Development Institute (CDI), global refined cobalt fell by 6.1% last year to 77,189 tonnes. In contrast, refined nickel production increased by 13.5%.

The situation remains uncertain in the DRC where an export tax on cobalt contained in concentrate exports, which was first introduced in 2010, was due to be increased on July 15 by $40 a tonne to $100/tonne.

This comes against the background of a threat, which now appears to be receding, of a total ban on exports. Originally shipments were supposed to be stopped by the end of July. This has now been extended to the end of this year. Given the inability of the DRC to process the concentrates due to power shortages, we doubt whether the ban will be implemented; certainly not in full.

It is also not clear the level of shipments will be in the immediate future from Tenke Fungurume, which is majority owned by Freeport McMoRan. Last year, it has been estimated that cobalt hydroxide production was around 11,300 tonnes. The original target for this year was 12,700 tonnes. However, operations have been affected by intermittent power supplies. Deliveries in August and September could fall by as much 40%.

Poor power supply has also affected operations at the Big Hill smelter, which has a capacity of 5,500 tpy of cobalt, which is 70% owned by George Forrest International. They are unconfirmed reports that the plant is operating at below 50% of its capacity. Any protracted problems in the DRC would particularly affect the Chinese market, given its reliance on raw materials and intermediate products.

Prices should recover after the summer slowdown

Cobalt is the only specialty alloy metal that we estimate to be in a deficit position in 2013. Our supply numbers are slightly different than the CDI reflecting a higher number for China.

Nevertheless the cobalt market has been characterised by a number of years, when consumption growth has outstripped production growth, resulting in the market being in an estimated 200 tonne deficit this year.

Our supply demand balance projections suggest that the market will also be in a deficit next year (1,100 tonnes). The largest deficit should be in the early part of the year before the new laterite output will be fully up and running. We have assumed that there will be only limited disruption to supplies from the DRC against an improving economic background.

Under this scenario we have already seen the low for the year of $10.85/lb on January 3 and we could see a high for the year of $16.85/lb in Q4. Details of Metal-Pages Research's quarterly supply-demand balance and price forecasts out to the end of 2014 are given in The Specialty Alloys Market Briefing.

This research service also provides market outlooks under three different scenarios. To receive a copy of this report contact: info@metal-pages.com.

 
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