Updates in Tuesday’s ASX session from up-and-coming cobalt miner Jervois Global, which has had a change of tack, and Evolution Mining, which has got things back on track.
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The lure of US government funding has seen budding cobalt producer Jervois Global (ASX: JRV) make a sharp about-turn and blow up its previous strategy.
Less than a month after it was forced to end the final work on its ICO cobalt mine in the American state of Idaho, Jervois has abandoned plans to build a metal refinery in Finland and will now look to establish a case for a similar operation in the US.
The attraction of the billions of dollars in subsidies and other aid under the Inflation Reduction Act and the Defence Production Act, has proved to be too much and Jervois will now join the rush to try and get its hands on that aid, while trying to keep its cobalt mining ambitions alive.
Jervois has already asked the US Defence Department for a $15 million grant for a study on a US plant and says it has high hopes that will be granted.
The company indicated that it would look at the $US369 billion in aid (subsidies etc) in the Inflation Reduction Act to help fund the refinery if it is shown to be viable, as well as the US Defence department’s aid which is already helping fund Australian resource company investments in America – such as $US120 million to half fund Lynas’ heavy rare earth separation plant in Texas.
In its announcement in late March, Jervois blamed the decision to halt work in Idaho on “continuing low cobalt prices and United States inflationary impacts on construction costs, to prudently preserve the value of ICO’s ore body.
“Jervois expects cobalt prices to recover over the medium term, including from the influences of the energy transition (EVs etc) and the Company’s expectation that Western cobalt purchasers will increasingly prefer to buy from sources with Western ESG credentials, such as Idaho.”
Jervois said it expects to complete construction of and commission ICO when cobalt prices recover, which it also expects will align with cobalt refining capacity in the U.S. brought into operation by Jervois and/or third parties.
“Jervois applied for U.S. Government grant monies to accelerate drilling aimed at increasing ICO mineral resource and reserve, and for studies to assess construction of a cobalt refinery in the U.S.; both can proceed as planned despite ICO’s suspension.”
On Tuesday, Jervois announced that it will “undertake a Bankable Feasibility Study (BFS) for a cobalt refinery located in the United States.”
The company said funding for the Study would be sought from the United States Department of Defence under the Defence Production Act Title III programme.
Jervois said the feasibility study will be based on the flowsheet, engineering, environmental assessment and other BFS sections already developed by Jervois Finland and AFRY Finland Oy for the expansion in capacity of Jervois’ Kokkola operations by 6,000 tonnes a year of refined cobalt in sulphate
Jervois said it will continue the study activities based on situating a 6,000 metric tonne per annum cobalt refinery in the US; product to be exclusively sulphate to focus on demand growth in electric vehicles from American car makers.
“Funding discussions for potential development of both a U.S. cobalt refinery and a Finnish refinery expansion are advancing with governments and industry partners, including automakers
“Cobalt refinery capacity in both the U.S. and Europe, along with planned restart of São Miguel Paulista refinery in Brazil, will consolidate Jervois’s status as a globally significant supplier of advanced cobalt products, with leading ESG credentials,” the company told the ASX on Tuesday.
The news saw the shares rise 1% to 9.9 cents on the ASX on Tuesday. The shares have lost 62% of their value so far this year, thanks to weakening cobalt prices and the decision to halt work in Idaho.
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Evolution Mining (ASX: EVN) says it has got the wet Ernest Henry mine dried out and rehabbed to the point whereit has safely resumed mining.
In a brief statement to the ASX on Tuesday, Evolution said it will continue to ramp up activities to reach normal production levels by the end of the June quarter 2023.
“The resumption of mining activities is within the previously announced six-week timeframe,” the company said on Tuesday.
“As previously noted in the ASX release dated 11 April 2023, the weather impact at Ernest Henry will result in lower gold and copper production of approximately 17,000 ounces and 10,000 tonnes respectively in FY2023 whilst gold and copper production in the March quarter was reduced by ~6,400 ounces and ~4,100 tonnes respectively,” Evolution reminded investors.
Evolution shares fell 0.8% to $3.53.
For the March quarter, Evolution last week reported gold production of 163,910 ounces and copper production of 9,668 tonnes at an AISC of $A1,291/oz (US$866/oz).
The wet weather saw gold and copper production at Ernest Henry cut in the three months to March by around 6,400 ounces and about 4,100 tonnes respectively.
Even after that cut, output was higher than the 148,787 ounces in the Covid-impacted March quarter last year. But copper production was lower than the 13,439 tonnes output in the March, 2022 quarter.
As a result, Evolution cut its group guidance is updated to approximately 660,000 ounces of gold, from the previous 720,000 ounces at an AISC of around A$1,390 per ounce ($A1,240 previously).
A month ago, Evolution reported that the $380 million underground expansion of its huge Cowal mine in central western NSW had seen mining start three months ahead of schedule. The ramp up is expected to be finished by June 30.
All this will help offset the impact of the wet weather at Ernest Henry.
