Meteoric rise for Meteoric as it pushes into Canada
13 days ago
With the combination of midas-man Tolga Kumova on board, a strong cobalt flavour, polymetallic promise and strong impending newsflow, it seems Meteoric's day may be about to dawn. And speaking of cobalt, Macquarie says the price outlook is superb, albeit a bit bumpy, for years to come thanks to electric vehicles.
Until quite recently, the share price performance of Meteoric Resources (ASX:MEI) was anything but meteoric.
Trading at a princely 1c a share in the opening months of the year, the market clearly wasn't interested in its Webb diamond exploration joint venture in Western Australia or its Warrego North/Tennant Creek copper-gold hunt in the Northern Territory for that matter.
But things started changing around May when Meteoric, originally floated as a gold-copper explorer back in 2004, signalled that after giving its best in the hunt for something meaningful in the back blocks of Australia for the past 13 years, it was off to Canada.
Oh, and there was also the revelation that Tolga "The Brand" Kumova had snapped up a near-10% stake in the company.
Fast forward to this week and Meteoric copped a price and volume inquiry from the ASX, asking for an explanation why its shares had motored from 4.1c on October 3 to 7.3c by Monday.
In its response, Meteoric pointed to the July completion of its deal to secure a number of Canadian exploration properties (copper, nickel, platinum group metals, gold and cobalt), a write-up in a speculative resources newsletter and its recent lodgement of a company presentation for a road show this week taking in Perth, Melbourne and Sydney.
The road show is having the desired effect, with Meteoric continuing its upwards trajectory to 7.6c on Thursday, giving it a none too shabby market cap of $36m.
Fronting the investors on the roadshow was Meteoric's recently appointed technical director Shastri Ramnath, an exploration geologist with 20 years multi-national experience and named among the top 100 "Global Inspirational Women in Mining'' by the UK branch of Women in Mining.
More to the point is that it was Ramnath's multi-commodity project generation firm Exiro Minerals that introduced Meteoric to its Canadian properties, drawing on its expertise in processing historical digital and paper datasets to generate new projects.
Ramnath told the Melbourne leg of the roadshow that she loved collecting 20 year-old boxes full of historical exploration data to uncover early and advanced stage projects.
And there are plenty of them thanks to the horrendous drop-off in Canada's exploration effort in the past five years.
It's kind of neat that the projects indentified and picked up for Meteoric are found in a northern arc around the Sudbury Basin.
The Sudbury Basin hosts a treasure trove of nickel-copper and other metals mined for close to 90 years and was formed 1.8 billion years ago when a meteor (or was it a comet?) slammed in to Mother Earth, leaving behind what is now a 60km-long oval-shaped crater. So Meteoric is now kind of where it should be.
Four properties from Ramnath's cardboard boxes make up Meteoric's Canadian push, one that comes with the promise of a strong news flow in the months ahead to keep the excitement levels up.
They are the Midrim and La Force copper-nickel-cobalt-PGM prospects on the Belle-Angliers greenstone belt, the Iron Mask cobalt prospect, and the Mulligan cobalt-silver prospect.
The cobalt flavour to the prospects was assumed to have been Kumova's interest in getting on the register, given his glory days at Syrah (SYR) with its focus on another battery material, graphite.
But the reality is that it was the Midrim prospect in Quebec which tickled his fancy. It's a regional polymetallic play and along with La Force, comes with $20m of historical geophysical and drilling data, the latter being available for re-assay.
Significant results from that previous drilling include 19.6m grading 3.22g/tonne PGE-gold, 2.99% copper, and 1.85% nickel from a depth of 15.5m.
Falconbridge (now part of Glencore) was once active in the area and said there was "excellent prospects" for several shallow, 3-5 million-tonne high-grade deposits.
A cluster of them would be a good outcome for Meteoric. But the real game is following up the potential of the previously identified large and flat-lying EM conductor at depth as the possible feeder system to the swarm of near-surface pods of mineralisation.
And as things pan out, near-term exploration on the Iron Mask cobalt prospect in Ontario will be worth watching. Not because of drilling by Meteoric but because of drilling by the unlisted but coming-to-market Battery Minerals Resources across the fence line at Iron Mask.
Based on historical records, the likelihood is for more seriously high-grade cobalt hits. About 500m from Meteoric's ground there is a historic shaft where what production there was is said to have averaged 15% cobalt and 255g/t silver.
So the grades in the Ontario cobalt belt are nothing like the zero-point-something most cobalt chasers will talk about. And high-grade cobalt hits are just what you would want at the moment with the stuff selling for $US60,000 a tonne.
Make mine cobalt
To be more precise, cobalt is currently fetching $US59,292 a tonne, or $US26.89 a pound, more than twice its annual average in 2016.
And it ain't stopping there thanks to the role of the lithium-ion battery in the electric vehicle (EV) and energy storage revolution.
Macquarie gave support to that thematic in its just-released updated commodities price deck, with the upgrade crown going to cobalt.
"Even allowing for EV battery mix evolving away from heavier cobalt loadings, we arrive at a total demand CAGR of 8.9% between 2017 and 2022, within which we have 14.9% total battery demand growth," Macquarie said.
There will be some bumps in the road though. "We upgrade nearby on deficits and stronger global macro sentiment, before mine re-starts (Katanga) and (new) projects drive a couple of years of oversupply (2019/2020), taking prices back down to $US20-$US22/lb."
"Further out, however, the shift into severe shortage begins. We see cobalt in a 17,000 tonne deficit by 2022 –equivalent to 3mt of copper shortfall or 8mt of aluminium – and thus call for strong price upside to average $US41/lb that year."