Expected Cobalt Gains Attract Exploration LeaderMon, 10/22/2018 - 13:14
Q: In 2017, Azure Minerals made two investments. What are your expectations for these?
A: We acquired the Alacrán Project from Teck Resources in 2014 and we discovered two high-grade silver and gold deposits. In 2016, Teck Resources exercised a clause in our partnership agreement to buy back into the project and be the operator. As a result, we needed to find a new project. In 2017, we bought two new projects that met our criteria of being high-grade, near to surface and hosting advanced-stage deposits. Oposura in Sonora is high-grade zinc and silver, starts at surface and has some significant exploration that was carried out in the 1970s by Peñoles. We acquired it from local owners and have been busy drilling it since September 2017. We are also running a preliminary economic assessment of its viability, which leads to a feasibility study; we hope to start mining it by 2019. This will be the catalyst for Azure Minerals’ transition from an exploration company into a mining company. The Sara Alicia project, also in Sonora, is gold and cobalt. As the latter metal is seeing increased demand for technological purposes, we have been looking for such a project in Mexico for a while. Its geological tenure is very good. We purchased it from a Mexican family in late 2017 and drilled in November of the same year, achieving outstanding high-grade results. It may be the highest-grade cobalt exploration project in the world. We have two very exciting projects and we hope to become both an explorer and an operator. We expect to be investing US$6 million in exploration over the next year.
Q: Given increased battery use, what is your forecast for cobalt?
A: We are getting a great deal of interest from investors for both Oposura and Sara Alicia, mainly from North America, China and Europe. Sara Alicia is especially appealing given the increased demand for cobalt. A German investment bank and an investment fund from New York have invested in Azure because of our cobalt project. We are convinced that cobalt is going to be in demand over the next couple of years. The price has risen from US$30,000/t in early 2017 to more than US$90,000/t in early 2018, an indicator of the expectations for this metal, which has many different sources. For example, there is a mineral belt in Australia with low-grade cobalt concentrations but it is very difficult and expensive to extract. Another major source is in the Democratic Republic of Congo (DRC) but the jurisdiction raises concerns about the way cobalt is extracted and its human cost. Having another source of high-grade cobalt is important, so we are really excited about the advantages of mining cobalt in Mexico.
Q: What are the main challenges that exploration in Mexico faces and what projects interest Azure Minerals the most?
A: We are always looking for new projects, both greenfield and brownfield. As we want to stay in the precious and base metals segments, we are convinced that Mexico has great potential. Also, we are very comfortable working in the northern states of Mexico and we have based our office in Hermosillo, Sonora. I do not think we will be exploring in nontraditional mining states but that would depend on the project.
Our experience with canceled mining concessions shows us that the country lacks fast turnaround times in making more land available for exploration. Once Mexico does that, more companies will come in, representing more income for the government and more opportunities for exploration and mining. There is a big part of Mexico waiting to be explored but companies cannot get access to concessions.
Q: Is the company considering a listing on other stock exchanges besides the ASX?
A: We have discussed the possibility of listing on other stock exchanges, especially in Canada. We have not yet researched the BMV, but perhaps it can be an option one day. The company needs representation in the countries in which it is listed and to have people to speak on its behalf. It is more expensive and more time-consuming. But if done properly, it can be really beneficial.