Palisade Research: A Brief Cobalt Primer

A recent report by Palisade Research highlighted LiCo Energy Metals Inc. (TSXV:LIC).
As quoted in the report:

LiCo Energy has entered into an option agreement to acquire up to a 100% interest of the prolific Teledyne property. The property covers a total of 1370 acres and consists of 5 mining claims and 6 staked crown claims in the Buck and Lorrain Townships, located in the district of Temiskaming and is located only 6 kilometers away from Cobalt. Teledyne is on-strike with the Agaunico Mine, the area’s most prolific past-producing cobalt mine.

The Teledyne project is an advanced stage cobalt asset that will likely be fast-tracked to production. There has been over $25 million (inflation-adjusted) of work already completed on-site, including a development ramp and a modern adit going down 500 feet parallel to the vein.

A previous owner of Teledye completed 6 diamond drill holes in 1979, as well as an additional 22 holes underground to confirm previous surface drilling in 1980. The initial program supported a development ramp of 2,300 feet to reach the delineated orezone, with the face of the ramp just 70 feet east of the orezone.

4 out of the 6 surface drill holes in the 1979 drilling campaign intersected ore grade cobalt, with individual cobalt grades of up to 10.6%. The underground drilling program produced similar results, with 18 out of the 22 intersecting ore grade cobalt, with individual cobalt grades reaching up to 10.2%. The average grade of the underground program was 0.57% cobalt with a width of 1.6 meters. Based on the drilling, pre NI 43-101 probable and inferred reserves accessible from the current ramp are estimated to be in excess of a 90,700 tonnes at 0.45% cobalt. That grade makes Teledyne one of highest-grade cobalt projects in the world.

Furthermore and of great importance, the drilling program has confirmed the continuation of the high grade Agaunico cobalt ore zone onto Teledyne with a strike length of at least 150 metres. The zone remains open to the south, with another 650 metres of potential mineralized strike length, representing an excellent target for a future drilling campaign.

Similar to Cobalt Power, LiCo Energy is a new entrant to the cobalt space and recently filed a NI 43-101 compliant, summary report on the Teledyne cobalt-silver property on SEDAR. The report contains historical exploration data, as well as recommendations to conduct an exploration program consisting of geologic compilation, geophysics and drilling. Phase 1 of the program is expected to begin in the next 3 to 4 weeks, and will cost an estimated C$700,000.

In our opinion, LiCo Energy is highly undervalued. Its flagship project has already been de-risked with significant drilling, and there is no denying the high-grade cobalt that is contained within. Teledyne is on trend with the past-producing Agaunico mine – further drilling was only cut short because of plummeting cobalt prices. Lastly, Teledyne has significant infrastructure in place, and is the likeliest candidate to be the next producing cobalt mine in North America – Buy now and hold.

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