BabyBulls (SAN DIEGO) – BabyBulls had the recent opportunity to speak with Barb Filas, President of Geovic Mining Corp. (OTCBB: GVCM; TSX: GMC). Barb updated us on the Company’s operations in Cameroon, Africa as well as in New Mexico and provided us with a number of milestones to look for as we head into 2012.
The Energy Report: Thank you for joining us this afternoon, Jonathan. You have a technical background in engineering and manufacturing in addition to your experience as an analyst. This gives you a unique perspective in evaluating investment opportunities. What do you look for specifically in a lithium company?
Jonathan Lee: Numerous factors. Our strategy is to find low-cost producers within a sector. Then from a capital cost side, it’s always more beneficial to have a lower capital cost to get a better return on equity and make the project more feasible. We like to have low capital expenditures and operating expenditures. Beyond that, it really comes down to valuing the company and trying to make sure that the equity is purchased at the right price. The two major factors that contribute to a better return on equity are good assets and low costs.
PETALUMA (Critical Metals Report) – The Critical Metals Report: Most resource stock investors are focused primarily on the precious metals and copper and, to some extent, the rare earth elements (REEs), which have gained increasing coverage in the past few years. Base and industrial metals such as nickel, manganese and cobalt seem to attract little investor interest. Why is that?
Rick Mills: Well, let’s focus on cobalt, which has never been on the radar screens of most investors. It is something new and investors have to get their heads around exactly what it is, and just how important it is to the functioning of a modern economy, in the green movement and in defense applications. Cobalt is going to undergo a massive sea change in perception among investors because it is so much more than an industrial metal. I call it the “King of Critical Metals.” Cobalt is an emerging story we can expect to hear more and more about as critical metals are the sexy new story.
TCMR: Why don’t you give us a definition of critical metals so everyone’s on the same page?
RM: There’s been some controversy over what is and isn’t a critical metal, so let’s lay it out for our readers based on three reports published in the last year or so. The U.S. Department of Energy says materials used in four clean energy technologies: wind turbines, electric vehicles, solar cells and energy efficient lighting, are critical now. The American Physical Society’s Panel on Public Affairs and the Materials Research Society coined the term “energy critical element” to describe elements that are essential to one or more of the new energy-related technologies. The European Union commissioned a report that identified 14 materials critical to the EU.
Geovic Mining (OTCBB: GVCM; TSX: GMC) released its Final Feasibility Study for its Nkamoua cobalt-nickel-manganese project in Cameroon, Africa. The results appear quite favorable, with Geovic’s 60.5% share of the project holding a $405 million net present value (NPV) assuming three-year trailing average prices for the respective metals, and a $191 million NPV assuming a 15% reduction in these average prices.
The study, completed by world-class engineering firm Lycopodium with input from numerous industry experts including a three-member panel of metallurgical experts, appears to set the stage for project financing later this year, and potentially equity investments from major industrial conglomerates into the project. Offtake demand for the company’s PRIMARY COBALT DEPOSIT, particularly given that it is in the politically stable country of Cameroon, has been very high, so this study could catalyze conclusion of these discussions.
With a market capitalization of roughly $60 million, news of finality regarding the Feasibility Study clearly yields significant upside potential for the Company, particularly if it can solidify offtake and financing arrangements as anticipated.
COQUITLAM, BC (Ahead of the Herd) – In 1751, Axel Fredrik Cronstedt of Sweden attempted to extract copper from the mineral Kupfernickel – today called niccolite. To his surprise instead of copper, he got a silvery white metal he started calling nickel. The name nickel comes from the German language and means Old Nick – which is a name Germans use for the devil – so nickel is “Old Nicks copper” or the “Devil’s copper.”
In 1913, Harry Brearly an English scientist, was the first to produce stainless steel when he accidentally discovered the addition of chromium makes stainless steel stainless. More than 10.5% chromium needs to be added to allow the outside protective oxide film to form on the steel – this provides corrosion resistance and gives stainless steel its bright, silvery appearance – the more chromium added the greater the corrosion resistance.
Nickel is an important alloying addition in nearly two thirds of the stainless steel produced today. Its primary function is to stabilize the austenitic (face-centered cubic crystal) structure of the steel. Normal carbon steel will, on cooling, transform from an austenite structure to a mixture of ferrite and cementite. When added to stainless steel nickel stops this transformation keeping the material fully austenite on cooling. Austenitic stainless steels have high ductility, low yield stress and high tensile strength when compared to carbon steel – aluminum and copper are examples of other metals with the austenitic structure.
Geovic Mining (OTCBB: GVCM; TSX: GMC) makes some changes to its senior management team. To start, Jack Sherborne will no longer be President and CEO, but rather will be in charge of the New Ventures Division. This stems in large part from a mild stroke Jack experienced recently, from which he is expected to make a full recovery. We have enjoyed working closely with Jack over the last several years, particularly traveling with him to various cities giving presentations to the investment community.
Michael Mason, a current director of the Company, has been appointed as Chief Executive Officer; Barbara Filas, the Company’s Chief Administrative Officer and Executive Vice President of Corporate Development, will become President; Timothy Arnold, most recently General Manager of General Moly, Inc. in Eureka, Nevada, has joined the Company as Chief Operating Officer; and Timothy Arnold will assume the role of Chief Operating Officer for the recently retired David Beling.
According to Wade Nesmith, Chairman of the Board of Directors, “These are important developments for the Company as it advances the Nkamouna project. The next year will be critical for us and we are pleased to be moving into 2011 with a realigned and augmented management team. Our key focus is to finalize the Feasibility Study Update and move forward toward identifying and executing the best plan to finance and develop the Nkamouna project. We are encouraged by the strong support of our partner, SNI and the Government of Cameroon. This project is of key strategic importance to Cameroon and we are determined to lead this project to fruition. Mike, Barb, and Tim will play key roles in this effort.”
Geovic Mining Corp. (OTCBB: GVCM; TSX: GMC) expects to release a feasibility study for its Nkamouna cobalt-nickel-managanese project by the end of April 2011. The report will incorporate project changes since 2008, including improvements to the process chemistry, processing plant, and mine plan.
FT.com – The recent gold price rally is the first stage of a multi-year bull market that will drive the gold price to at least $2,000 an ounce by 2015. A mixture of economic factors and innovations in how institutions can purchase the metal have moved prices. But the biggest driver of gold prices is yet to come.
First, a recap of the factors that have taken gold prices to current levels.
The economic causes centre on monetary policy and the risk of inflation. Some industrial countries are striving to devalue their currencies and will use monetary policy to support the goal. Japan recently spent $24bn on unsterilised intervention trying to weaken the yen. The policy succeeded, albeit briefly. In 2003-04, Japan spent more than $350bn on intervention and could easily do so again. This policy would increase dollar liquidity while nurturing more monetary growth in Japan itself.
LONDON (Reuters) – Production of molybdenum will fail to keep pace with robust demand, resulting in firmer prices in the coming years, while China’s large stocks of cobalt will weigh on prices, commodities research firm CPM Group said.
Between 2009 and 2012, consumption of molybdenum, an ingredient in making steel, is set to grow by 9.2 percent, Catherine Virga, director of research at CPM Group, said on Monday at the London Metal Exchange (LME) conference.
“There are few probable (molybdenum) projects expected until 2013, and even then there is a significant amount of risk to (those) projects,” Virga said. “Molybdenum prices might not see much of a (price) pick-up until re-stocking resumes in the first quarter of next year,” she added.