Australian Mines: Potential Prime Cobalt Player

THE CONFERENCE CALLER: Addressing a crowd of potential investors at the 2018 RIU Explorers Conference, Australian Mines (ASX: AUZ) managing director Benjamin Bell declared the company’s status as the most advanced cobalt-nickel-scandium producer in Australia. By Jack Baker

Australian Mines announced on Monday that it has entered into a $5 billion off-take agreement with Korean company, SK Innovation.

The contract, for up to 13 years, is for SK to purchase 100 per cent of the product from Australian Mines’ Sconi plant in Queensland, totalling roughly $400 million worth of cobalt-nickel per year.

Part of the agreement is for SK to provide funding and to potentially take a 20 per cent stake at a 30 per cent premium.

Bell emphasised that the arrangement was more than a simple off-take relationship.

“The reason why we did this deal with SK, we’ve spoken to a number of companies, car battery manufacturers and the like,” he told the full auditorium.

“It’s not just a buyer seller relationship, it’s a partnership.

“They’ll help build the plant, come onto our board and take the product…it de-risks the project, it means it gets built.

“This is the only one in the country that shows a clear path into production.”

Bell admitted that many cobalt nickel companies have forecast growth in battery-metal demand based on the promise of the electric car but emphasised that Australian Mines is already there.

“Our cobalt-nickel is specifically going into that car,” he said.

“This is not a picture of a conceptual car…it’s going straight into Mercedes-Benz via the SK plant in Hungary.”

The company has constructed a demonstration plant in Perth for investors.

Capable of producing nickel and cobalt sulphate for sale, the plant is also capable of producing scandium oxide for other interested off-take parties.

Australian Mines has additional cobalt projects in the pipeline with the Sconi project essentially completed.

The second is in Flemington where it begins drilling next month with a third near Broken Hill.

Bell said the company would inevitably be compared to Clean TeQ (ASX: CLQ), Australia’s largest cobalt company, but iterated his belief in Australian Mines’ standing as the most advanced.

“In addition to getting ours in production probably first and being able to show a clear pathway to that, you’re also getting the upside for more than one project,” he stated.