InvestorIntel article: High grade silver plus high grade cobalt is how Canada Cobalt Works

Oct 7, 2019

Yes, it’s still about cobalt in the long term but right now Canada Cobalt Works Inc. (TSXV: CCW | OTCQB: CCWOF) is primarily a silver play. Not only do they have incredibly high grade silver in their underground mine, very soon they will be producing it via tailings sitting dormant on the property. Their permit is expected to be issued by year’s end with a possibility of a US$10 million or greater revenue run rate in the first half of 2020.

With cobalt mines shutting down in the Democratic Republic of Congo (DRC) there looks to be a significant change in what has been a depressed cobalt market. Add this to Canada Cobalt Works silver assets and you are looking at a stock that is in the early stages of a major reversal.

Canada Cobalt Works Inc. (formerly Castle Silver Resources) is a growing silver and cobalt company that has past producing cobalt/silver mines under exploration. Canada Cobalt Works owns tenements over a 78 square km total claim zone NE of the town of Gowganda, Ontario, Canada. Their flagship asset is the Castle Cobalt-Silver Property which includes the historic Castle Mine. The property is close to all needed infrastructure.

In 2018 the Company used an environmentally friendly metal separation technology for efficient extraction of cobalt to produce a cobalt sulphate compound suitable for end use in battery production. This material was taken directly from the first level adit at the historic Castle Mine site.

Frank Basa, CEO of Canada Cobalt Works Inc., stated: “We take a distressed asset, in this case the Castle Mine which was a former high-grade silver/cobalt producer, put it together, fund it, and develop the asset.”

The history of the Castle Mine

In the 1980s the Castle Mine was a prized silver asset that extracted 891 grams per metric tonne year-in-year-out for the entire 10 years that previous owners Agnico Eagle mined it. In 1989 the Castle Mine was shut down, not because it had run its life, but because the price of silver fell too low.

Castle Mine has high grade silver and cobalt

Drilling is showing that the Castle Mine still has plenty of high-grade silver. New silver/cobalt vein structures found during the 2018 underground drilling have included 76.4 oz/ton (2,620 g/t) silver over 5.51 metres and much higher grades over shorter distances (385.2 oz/ton (13,208 g/t) silver over 0.5 metres). Further proof is likely on its way as the Company continues its underground drilling.

CEO Basa continues: “What we have are very high silver values, which a lot of our investors were surprised at. We normally get like 100, 200, 300 ounces a ton in our core while most people get, let us say, 10, 15, 20 ounces a ton.”

Note: Anything above 50g/t silver is considered high grade, and for cobalt over 2% is considered high grade.

Some of the high grade silver and cobalt drill results at Castle Mine

Silver production alone would pay for the cost of mining

A way of looking at this is the silver alone would pay for the cost of mining. Earnings from cobalt and other metals will be a bonus, so even if the cobalt price was to remained depressed, the Castle Mine can still be mined. However the price of cobalt may not be that depressing, the decision to place the world’s largest single source of cobalt into care and maintenance at the end of 2019 is likely to help other producers. But it does place more uncertainty on the cobalt supply chain, with a risk that may see electric vehicle (EV) makers increase efforts to reduce cobalt in lithium-ion batteries.

With a name like Canada Cobalt Works it might be easy to ignore the fact the company has a high-grade silver project. Once in production, costs are expected to be covered by the silver, with the cobalt mined going straight to gross profit. So no matter the cobalt price Canada Cobalt Works can prosper. Canada Cobalt Works also have some gold potential after a recent apparent gold system discovery 1.5 km east of the Castle Mine. As a final bonus Canada Cobalt Work’s properties are very well located near to infrastructure, and in the mining friendly region of Ontario Canada.

Stay tuned for further drill results.

https://www.canadacobaltworks.com/