Dear Elizabeth:
Judging by your posts on this thread, flatulence is not your only problem. It would seem that your knowledge of the cobalt market is even less than that for bismuth or this Company. A little bit of knowledge is clearly dangerous!
The Cobalt Development Institute held their annual meeting in Toronto last month and presentations from Resource Strategies gave a rather bullish forcast for the cobalt market, a sentiment echoed in the latest edition of the Metal Bulletin and a recent market summary by Engineering and Mining Journal. Cobalt consumption has grown to more than 40,000 tonnes in 2000 and will be in a supply deficit in 2001. Average annual growth over the last 10 years has been 4.5%, recently because of the demand for super alloys, and previously from chemicals used to manufacture rechargeable batteries and catalysts. This growth trend shows no sign of abatement. Furthermore the presentation by OM Group at the CDI meeting suggested that new hybrid automobiles and fuel cell technology will almost certainly employ cobalt in their catalysts. This is in addition to the cobalt-bearing rechargeable batteries that will be required.
Voisey's Bay was initially forcast by Inco to produce 3,000 tonnes of cobalt per year. Prior to their much publicized problems with the Newfoundland government, they suggested production would likely be half of earlier predictions (1,500 tonnes). With continuation of current growth rates, an additional 1,600 tonnes can be accomodated in the Cobalt market this year alone. Voisey's Bay is not likely to have a significant affect on the market when its production can likely be absorbed in only one or two years (at the higher production rate)and this production could only occur in 2005 at the earliest, provided they can come to terms with NFLD.
If you were down and out on the cobalt market, I suggest you choose better examples such as Inco's Goro nickel-cobalt laterite deposit in New Caledonia, which is a bigger threat. But then a knowledgeable and fair minded person person would certainly balance that argument with the fact that Centaur Mining's Cawse Ni-Co laterite deposit in Australia is in receivership and that the hard assets are about to be liquidated. Also, Preston Mining's Bulong Ni-Co laterite deposit in Australia is in default of its loan covenants. That Anaconda Nickel's Murrin Murrin Ni-Co laterite deposit has not been able to reach design capacity, is losing money and that the Company was involved in a performance related proxy fight last week. That the Kaesse bio-leach Co recovery project from tailings in Uganda has also not lived up to design expectations and will not likely repay capital. That Chiambishi in Zambia is experiencing a several month shutdown because of a leak which damaged the refractory brick linings in their production furnace. The facts are that the cobalt market is expanding and new sources of supply are required in order to maintain price stability.
With respect to market transparency and manipulation, these have been dealt with by the establishment of internet sales sites by two of the larger producers (OMG and WMC). Furthermore, market manipulation in the past has benefited the producers by producing higher prices. With new producers currently in the market and less dependancy on central african suppliers, the cobalt market has been much improved and is quite transparent.
With respect to your comments about thhe Nico deposit and proximity to infrastructure, there are few recent discoveries that are better located. These issues are addressed in Fortune's latest press release and 2000 annual report. The deposit is only 8km from the past producing Rayrock mine and its former access road. It is 20km from excess power available from the Snare hydro complex. The project is only 160km from Yellowknife where there is an active mining community, an autoclave capable of treating Nico concentrates, a gold circuit, and a fully serviced mine infrastructure. The deposit is also well located to Fort Saskachewaan in northern Alberta where there are two cobalt procesing plants (Sherritt and Union Miniere).
Fortune's current work is being carried out under the supervision of Strathcona Mineral Services and Klaus Konigsmann, the former VP Engineering for Noranda who add significant credibility to an already impressive board and management group. Before you jump Lizzy, put on the parachute or at least do some homework. |
