TORONTO, July 24, 2019 /CNW/ - Cobalt 27 Capital Corp.
(TSXV: KBLT) (OTCQX: CBLLF) (FRA: 270) ("Cobalt 27" or the
"Company") is pleased to report it has filed a technical
report for its recently acquired interest in the low-cost,
long-life, Ramu nickel-cobalt operation ("Ramu"), prepared
in accordance with National Instrument 43-101 - Standards for
Disclosure for Mineral Projects ("NI 43-101"). The Ramu
Technical Report is in support of the Company's May 17, 2019 news release announcing the
acquisition of Highlands Pacific Limited, whereby Cobalt 27
acquired an 8.56% joint venture interest in Ramu, an integrated
producing nickel-cobalt operation, located in Madang Province,
Papua New Guinea ("PNG")
(see Figure 1).
Anthony Milewski, Chairman and
CEO of Cobalt 27, commented, "We are excited to be releasing
additional information on the Ramu asset so that investors can
better understand the world-class nature of this operation and the
nickel and cobalt exposure it provides to investors. Ramu is a
first-quartile project on the global nickel cost-curve, has an
extensive mine life, with potential to deliver 30+ years, and
compelling exploration upside. The hydroxide product produced at
Ramu is optimal for electric vehicles and battery storage markets,
in fact already being sold to battery makers, enhancing
shareholders' nickel exposure at a time when global inventory
levels are approaching levels not seen since the end of 2012, when
nickel was trading at approximately US$8 per pound, on average."
The technical report was independently prepared by Behre Dolbear
Australia Pty Ltd. ("BDA") after several months of working
with majority owner and operator, Metallurgical Corporation of
China Limited ("MCC") to conduct required due diligence and
site visits. MCC is a major Chinese State-owned construction and
operating company ranked in the Fortune Global 500. Ramu is
comprised of the Kurumbukari mine, which utilizes conventional
open-pit mining methods and beneficiation plant designed to treat
around 4.6 million tonnes of ore per annum, located in the
foothills of the Bismarck Ranges; and the Basamuk processing plant
("Basamuk Plant") located on the East coast of Papua New Guinea, approximately 55km southeast
of Madang. Beneficiated ore is transported from the mine via a 135
km slurry pipeline to the Basamuk Plant which is designed to
produce a mixed nickel-cobalt hydroxide product ("MHP")
containing around 32,600 tonnes nickel and 3,300 tonnes cobalt on
an annual basis. MHP production for 2017 and 2018 has exceeded
design capacity (106% and 108% respectively). BDA considers that
commissioning and ramp-up was completed in 2015, and that the plant
is capable of operating at design capacity going forward.
Economic Analysis
BDA has developed a life of mine ("LOM") cash flow
forecast model for Ramu using Proven and Probable Mineral Reserves
based on the macroeconomic assumptions set out in detail in the
technical report. Over the current LOM of 14 years from 2019, Ramu
projects that 52.3Mt of ore will be processed to produce 428,000
tonnes of nickel and 47,000 tonnes of cobalt in MHP. The LOM
capital costs are projected to total US$247
million, for sustaining capital. Projected operating costs
over the LOM are expected to remain consistent with actual
operating costs experienced to date. Based on Wood Mackenzie's
independent analysis of global primary nickel producers, Ramu has
positioned itself at or near the bottom quartile of global
production based on a C1 cash cost basis since late 2017. This
supports that Ramu has been profitable on a C1 basis at all points
of the nickel commodity cycle over the last few years. Projections
for revenue are based on the Mineral Resource and Reserve estimates
and continuation of current production levels.
Established Operating History
Ramu has an established history of operations since being
commissioned in 2012. In the last two years, the refinery has
exceeded design capacity, producing an average of approximately
90,000 tonnes per annum of MHP containing 35,000 tonnes of nickel
and 3,300 tonnes of cobalt. Current guidance for 2019 indicates
that similar production levels will once again be attained. A
summary of Ramu's historical ore and MHP production is shown in
Table 1 and Figure 2.
Over the course of 2017, 2018 and H1 2019 Ramu has consistently
ranked at or near the bottom quartile of C1 cash costs as reported
by Wood Mackenzie. Since Q4 2017 Wood Mackenzie has reported that
Ramu has averaged a C1 cash cost of US$
2.27/lb of nickel which is below the same period average for
the bottom quartile of US$2.34/lb
(see Figure 3).
Table 1: Ramu Nickel and
Cobalt Production History
Item
|
Units
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
Ore Mined
|
Mt (wet)
|
1.547
|
3.482
|
5.949
|
6.105
|
3.876
|
5.523
|
6.350
|
Ore
Processed
|
Mt (dry)
|
0.816
|
1.253
|
2.273
|
2.784
|
2.270
|
3.601
|
3.719
|
Ore Grade
|
Ni (%)
|
0.98
|
1.00
|
1.06
|
1.12
|
1.13
|
1.09
|
1.10
|
Ore Grade
|
Co (%)
|
0.09
|
0.09
|
0.10
|
0.11
|
0.11
|
0.11
|
0.10
|
MHP
Produced
|
t (dry)
|
13,777
|
29,736
|
57,360
|
65,286
|
57,824
|
89,947
|
92,258
|
Contained
Ni
|
t
|
5,283
|
11,369
|
20,987
|
25,581
|
22,269
|
34,666
|
35,355
|
Contained
Co
|
t
|
469
|
1,013
|
2,134
|
2,505
|
2,191
|
3,308
|
3,275
|
Mineral Resources and Mineral Reserves
The Mineral Resource and Reserve estimates for the Ramu nickel
and cobalt deposit have been carried out under the guidelines of
the Australasian JORC Code by Competent Persons as defined by those
guidelines. The JORC Code guidelines are compatible with the
requirements of NI 43-101 in this regard. Summary Mineral Resources
Reserves extracted from the report are summarized in Tables 2 and
3, respectively.
Table 2: Ramu Mineral Resources – December 31, 20171, 2
Category
|
Tonnage
(Mt)
|
Nickel Grade
(%)
|
Cobalt Grade
(%)
|
Measured
|
34
|
0.9
|
0.1
|
Indicated
|
42
|
0.9
|
0.1
|
Measured &
Indicated
|
76
|
0.9
|
0.1
|
Inferred
|
60
|
1.0
|
0.1
|
Table 3: Ramu Mineral Reserves – December
31, 20172
Category
|
Tonnage
(Mt)
|
Nickel Grade
(%)
|
Cobalt Grade
(%)
|
Proven
|
24
|
0.9
|
0.1
|
Probable
|
33
|
0.9
|
0.1
|
Total
Reserves
|
56
|
0.9
|
0.1
|
Significant Exploration Potential
The technical report highlights significant exploration
potential within and outside of the current exploration license
area, and it is anticipated that the total Mineral Resource will
increase significantly when additional drilling is conducted. The
following Mineral Resource potential at Ramu is highlighted by the
technical report:
- The currently drilled area for defining Mineral Resources is
about 25km2, which represents a portion of the total
Mining License (SML 8) area of 54.4km2 and less than 13%
of the surrounding Exploration License (EL 2579) with an area of
194.95km2 (Figure 4). Additional drilling outside the
currently drilled area is expected to increase the Mineral
Resources, and potentially add to the Mineral Reserves.
- In addition to the Measured and Indicated Resources, there are
significant Inferred Resources in the current Ramu resource
estimate. Additional infill drilling could upgrade at least a
portion of the Inferred Resource to Measured and Indicated status,
which could potentially be included in future reserves with further
mine planning.
The Ramu technical report is available on SEDAR at www.sedar.com
and on the Company's website www.cobalt27.com
Ownership Summary
Ramu is a joint venture between MCC Ramu, which has 85%
ownership and is the operator of the project, and Ramu Nickel
Limited, a wholly owned subsidiary of Cobalt 27 with an 8.56%
interest, and Mineral Resources Madang Limited (landowner entity)
and Mineral Resources Ramu Limited (government entity) which hold
2.5% and 3.94% interest respectively, and which are both managed by
Mineral Resource Development Corporation ("MRDC"). MRDC is a
PNG Government entity which holds the government interest of 3.94%
and manages the landowners' interest of 2.5% in trust for the
landowners. MCC Ramu is wholly owned by MCC-JJJ Mining whose
shareholders are MCC with 67.02%, Jilin Jien Nickel Industry
Limited (13%), Jiuquan Iron and Steel (Group) Limited (13%) and
Jinchuan Group Limited (6.98%).
As disclosed in the Company's press release dated June 18, 2019, Cobalt 27 and Pala Investments
Limited ("Pala") have entered into an agreement pursuant to
which Pala will acquire 100% of Cobalt 27's issued and outstanding
common shares (other than the approximately 19% that Pala already
owns), for C$5.75 per common share,
comprised of C$3.57 in cash plus
C$2.18 in shares of a newly listed
company to be named Nickel 28 Capital Corp. ("Nickel 28").
Nickel 28 will hold the joint venture interest in Ramu, among other
assets including a royalty portfolio on future projects, certain
equity positions, and US$5 million in
cash with no corporate debt.
Footnotes
- Resources at a cut off of 0.5% Ni; resources are inclusive of
reserves; the figures may not add exactly due to rounding;
resources do not include the +2mm rock fragments in the rocky
saprolite layers; Mineral Resources that are not Mineral Reserves
do not have demonstrated economic viability; the Mineral Resources
are classified according to the 2014 CIM Definition Standards.
- Mineral Reserves at a cut-off grade of 0.5% Ni, which is not
materially different from the 0.58% nickel equivalent cut-off grade
used in the previous year; reserves are included in resources; the
figures may not add exactly due to rounding; reserves do not
include the +2mm rock fragments in the rocky saprolite layers; the
Mineral Reserves are classified according to the 2014 CIM
Definition Standards.
NI 43-101 Matters
The scientific and technical information in this news release
has been prepared, reviewed and approved in accordance with
Canadian regulatory requirements by, or under the supervision of
Dr. Qingping Deng, Peter D. Ingham, Roland
Nice, and Adrian Brett, of
BDA, all of whom are independent Qualified Persons as set out in NI
43-101.
The Mineral Resource estimate set out in this news release was
classified according to the CIM Definition Standards for Mineral
Resources and Mineral Reserves (November
2010) by Dr Qingping Deng, of
BDA.
The Mineral Reserve estimate set out in this news release was
classified according to the CIM Definition Standards for Mineral
Resources and Mineral Reserves (November
2010) by Peter D. Ingham, of
BDA.
Readers are advised that Mineral Resources not included in
Mineral Reserves do not demonstrate economic viability. Mineral
Resource estimates do not account for mineability, selectivity,
mining loss and dilution. These Mineral Resource estimates include
Inferred Mineral Resources that are normally considered too
speculative geologically to have economic considerations applied to
them that would enable them to be categorized as Mineral Reserves.
There is no certainty that Inferred Mineral Resources will be
converted to Measured and Indicated categories through further
drilling, or into Mineral Reserves, once economic considerations
are applied.
About Cobalt 27
Cobalt 27 Capital Corp. is a leading battery metals streaming
company offering exposure to metals integral to key technologies of
the electric vehicle and energy storage markets. Cobalt 27 holds an
8.56% joint venture interest in the long-life, world-class Ramu
mine which currently delivers near-term attributable nickel and
cobalt production. Cobalt 27 also manages a portfolio of 11
royalties. Cobalt 27 also owns physical cobalt and a cobalt stream
on the Voisey's Bay mine.
For Further Information Please Contact:
Justin Cochrane
President & COO
info@cobalt27.com
Cautionary Note Regarding Forward-Looking
Statements
This news release contains certain information which constitutes
'forward-looking statements' and 'forward-looking information'
within the meaning of applicable Canadian securities laws. Any
statements
that are contained in this news release that are not statements
of historical fact may be deemed to be forward-looking statements.
Forward looking statements are often identified by terms such as
"may", "should", "anticipate", "expect", "potential", "believe",
"intend" or the negative of these terms and similar expressions.
Forward-looking statements in this news release include, but are
not limited to statements with respect to: production and
operations at Ramu; the LOM cash flow, capital expenditure and
operating expenditure forecasts for Ramu; cash costs at Ramu; and
Ramu's Mineral Reserves and Mineral Resources (and the potential to
increase such Mineral Resources). This news release also contains
references to estimates of Mineral Reserves and Mineral Resources.
The estimation of Mineral Reserves and Mineral Resources is
inherently uncertain and involves subjective judgments about many
relevant factors. Mineral Resources that are not Mineral Reserves
do not have demonstrated economic viability. The accuracy of any
such estimates is a function of the quantity and quality of
available data, and of the assumptions made and judgments used in
engineering and geological interpretation, which may prove to be
unreliable and depend, to a certain extent, upon the analysis of
drilling results and statistical inferences that may ultimately
prove to be inaccurate. Mineral Resource estimates may have to be
re-estimated based on, among other things: (i) fluctuations in
nickel and cobalt prices or other mineral prices; (ii) results of
drilling; (iii) results of metallurgical testing and other studies;
(iv) changes to proposed mining operations, including dilution; (v)
the evaluation of mine plans subsequent to the date of any
estimates; (vi) the possible failure to receive required permits,
approvals and licences, or changes to any such permits, approvals
or licences; and (v) changes in laws, rules or regulations,
including changes to tax and royalty rates whether to be applied
prospectively or retroactively. Readers are cautioned not to place
undue reliance on forward-looking statements. Forward-looking
statements involve known and unknown risks and uncertainties, most
of which are beyond the Company's control. For more details on
these and other risk factors see the Company's most recent Annual
Information Form on file with Canadian securities regulatory
authorities on SEDAR at www.sedar.com under the heading "Risk
Factors". Should one or more of the risks or uncertainties
underlying these forward-looking statements materialize, or should
assumptions underlying the forward-looking statements prove
incorrect, actual results, performance or achievements could vary
materially from those expressed or implied by the forward-looking
statements.
The forward-looking statements contained herein are made as of
the date of this release and, other than as required by applicable
securities laws, the Company does not assume any obligation to
update or revise them to reflect new events or circumstances. The
forward-looking statements contained in this release are expressly
qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. No securities regulatory authority has
either approved or disapproved of the contents of this news
release.
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SOURCE Cobalt 27 Capital Corp