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COBALT BLUE HOLDINGS LTD (COB) - From Cobalt to Copper: Diversifying Australia's Mining Future

• Andrew Musgrave

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The mining landscape is evolving rapidly as Australia positions itself as a critical minerals powerhouse, and Cobalt Blue Holdings stands at the forefront of this transformation. In this revealing conversation, newly appointed CEO Andrew Tong charts a bold new direction for the company that extends well beyond its namesake mineral.

After nine years with the company, Andrew has stepped into the leadership role with a clear mission: transitioning Cobalt Blue from a development company into a cash-generating business. At the heart of this strategy are two complementary projects poised to capitalize on the growing demand for energy transition minerals.

The Kwinana Cobalt Refinery represents the company's nearest-term opportunity, with a Final Investment Decision targeted for late 2025. Having secured a binding framework agreement with Japanese trading house Iwatani and a crucial feedstock supply deal with mining giant Glencore, the refinery project has gained significant momentum. The facility will process cobalt hydroxide from the Congo into high-value cobalt sulphate and cobalt metal products for the battery and aerospace industries, potentially generating approximately $20 million in annual free cash flow.

Complementing this is the recently acquired Halls Creek copper-zinc project in Western Australia's Kimberley region. The clever two-stage development approach begins with a low-capital oxide heap leach operation to produce copper metal, followed by an underground sulphide mine producing copper and zinc concentrates. This sequential approach minimizes upfront capital while establishing early revenue streams that can fund future development.

Want to stay ahead of Australia's evolving critical minerals sector? Subscribe to ASX Briefs for exclusive insights from the executives leading the energy transition.

Andrew Musgrave Host

Welcome back to ASX Briefs, where we speak with the leaders shaping the future of Australia's critical minerals and energy transition sectors. And today we're joined by Andrew Tong, the CEO of Cobalt Blue Holdings Limited, a company at the forefront of supplying high purity cobalt and now diversifying into copper and zinc through its expanding project portfolio. Andrew, thanks for joining me today and welcome to the ASX Briefs podcast. 

Andrew Tong Guest

Great, nice to be with you, Andrew. It's good to talk through our company. 

Andrew Musgrave Host

Okay now, Andrew, for investors that may be unfamiliar with Cobalt Blue, can you just provide a brief overview of the company? 

Andrew Tong Guest

Sure, I've been CEO for six weeks now, so it's great to update our stakeholders on what we're trying to do as a company. I've stepped into this role. I've been with Cobalt Blue probably since 2017, so quite a while but now stepped up into the CEO role. My aim is to rejig our strategy. We're going through that at the moment. We're really focused on transitioning the company into an operating cash flow business. We've got two really exciting projects before us. That's the Cobalt Refinery over in Kwinana in WA and also our copper project up in Halls Creek in the Kimberley region of WA. So great to introduce those projects to the listeners today. 

Andrew Musgrave Host

Okay and just touching on the Cobalt refinery in Kwinana, you've locked in a feedstock supply deal with Glencore covering up to 50% of KCR's needs. So how does this transform the path to FID and commercial production? 

Andrew Tong Guest

Early in April we finalised a binding agreement with Iwatani, which is a Japanese trading house. That binding agreement lays out all of the milestones to get to FID. We're targeting FID at the end of this year, so we've got about six months to go in terms of meeting all these milestones. That agreement laid out various steps around feed agreements, offtake agreements, permitting and so on. On the feed side, you're right, we just recently signed up a binding agreement with Glencore for feedstock to that refinery. The condition preceding is obviously that we go build the plant and get that completed. But assuming that we can do all of those steps, then that agreement with Glencore is quite secure in terms of providing cobalt hydroxide from the Congo to Fremantle Port. We would then process that and convert it into both cobalt sulphate and cobalt metal. So, our pre-FID agreement with Iwatani lays out those steps and the Glencore agreement's a great milestone to have now ticked off. We've got a number of other milestones that we need to do through the rest of this year. 

Andrew Musgrave Host

Okay, and just touching on that, the milestones. You've made strong progress on the permitting, engineering and financing. So, what would be some of those critical milestones that you have to reach to get to FID? 

Andrew Tong Guest

In terms of the permitting, we've submitted the various documentation to the WA regulators late last year. They're working through those applications. We're hoping to receive back the permits over the next quarter or so. It's a little bit hard to be definitive exactly on that timeline, but we did submit them late last year. In terms of the other milestones, this year we really need to get some offtake executed, some offtake agreements executed. To do that, we're producing samples of cobalt sulphate and cobalt metal in Broken Hill in our testing facility. At the moment those samples are used for the negotiation of those offtake agreements. So through the course of the next six months, we're really trying to finalise the sample production in Broken Hill. That'll then enable us to negotiate some of the offtake agreements and get those into a position ahead of FID. So that's really the big milestones that we need to meet as we head into the end of the year. 

Andrew Musgrave Host

Okay, and looking at Halls Creek. So, the Halls Creek scoping study shows promising economics. So, can you walk us through the two-stage development strategy and how it mitigates risk while enabling early cash flow? 

Andrew Tong Guest

Sure. So, while Cobalt Blue has been trying to pursue our Cobalt refinery for the last couple of years, and now that's most of the way towards an FID decision, earlier this year we decided to widen our asset portfolio and we were able to negotiate the purchase of the Halls Creek project that's now in a JV structure with AuKing. We were able to purchase the initial share of that project in February. We need to now spend a couple of million dollars as an earning agreement over the next couple of years to increase our ownership up to 75%. Since February this year we've been working really hard on a scoping study. That scoping study outlines both an oxide open-cut heap leach SXEW project to make copper metal and a sulphide underground concentrator project to make copper concentrates and zinc concentrates. 

So, at Halls Creek there's two deposits. Those deposits are next to each other. They're on two separate mining leases and, as I said, one of those will be an open cut project. That's where we want to start the project. That's a low-cost capital startup and with the heap leach operation it's quite quick to first cash flows on that project. We will then fund all of the sulphide project development out of the cash flows of the oxide project. So, in total we have 10 years, but the first five years is the heap leach project and then the cash flows are used to develop up the second half of the project, which is a sulphide project. 

Andrew Musgrave Host

Okay just looking at technology, the Broken Hill Technology Centre has been pivotal in validating your process flow sheets. So, what innovations or efficiencies have emerged from this in-house capability? 

Andrew Tong Guest

Cobalt Blue back in 2021 decided to invest into the pilot plant and then demonstration plant facility in Broken Hill. Out there over the last few years we've run quite a lot of feasibility level test work, piloting test work and so on. Long-term shareholders would appreciate that. We dug out nearly 6,000 tonne of ore at one point from the Broken Hill Cobalt project and we're able to process that through various stages through that plant. Where that plant sits now, through 2025 and the last parts of 24, we've really been focused on providing samples for the refinery, the Cobalt Refinery program.

At this point in time we're now looking to treat black mass recycling from the battery industry and other industrial waste out there. So, we're now looking at some commercialized opportunities through that plant. But what this does is it provides Cobalt Blue with a big point of difference to many other companies because we can run a lot of our test work metallurgical design, flow sheet optimization and then obviously the engineering in-house. Half of my team are process engineers or metallurgists, so by writing this plan we can do a lot of that work quite cost effectively. It does mean that we still rely upon third-party labs, because that's really important in the due diligence process, but by having this facility we can really do a lot of the work in-house and speed up the time to project development. 

Andrew Musgrave Host

Okay and just touching on the financials, with cash of just over 2 million at the end of March and near-term grant funding expected, how are you managing capital discipline while advancing two major projects? 

Andrew Tong Guest

So earlier this year, as part of my change in role to CEO, we've gone through and reorganized the company in terms of just reallocating the people and the resources. So obviously we're very capital. We've got a lot of discipline on our capital expenditure as we bring these two projects along. In terms of our next steps going forward, for the Halls Creek project, we want to move into a feasibility study. We'd expect that to take the best part of two to three years to complete, largely because of the permitting up there that we need to get done. And while we're doing that feasibility study, we want to bring our refinery into production. We're doing that feasibility study, we want to bring our refinery into production. So, our next really big piece for the refinery is to move through FID and then we'll be able to present to market the financing strategy around that later this year. 

Andrew Musgrave Host

Okay, now just to wrap things up, Andrew. What are some of the key messages you'd like to leave with shareholders over the outlook for the next 12 to 18 months? 

Andrew Tong Guest

I think there's a couple of points. 

The first is that Cobalt Blue's got two really exciting projects which, if everything pans out, could be into operations within the next three to four years. 

The first is our refinery and I think there's some really good news flow coming on that over the next six months as we move up the curve and get ourselves to FID. In terms of the Halls Creek project. That really gives us some diversification and longer-term exposure to the copper market. For that project we're looking at 5,000 tonne copper and 15,000 tonne of zinc a year. So, if we can bring that project into production, that really sets us up with strong cash flows. In terms of the cash flow side of the business, the refinery is expected or we're targeting around $20 million free cash flow in Aussie dollars to Cobalt Blue, and if we're able to then bring the Halls Creek project online, that's really where we want to head to in terms of the type of business that we have. Those two projects lay the platform then to further long-term opportunities. But really at the moment we need to get these wins on these projects before we stretch further ahead. 

Andrew Musgrave Host

Okay, Andrew. Well, it's been great to chat today, so thanks for your time and we look forward to further updates in the future from Cobalt Blue Holdings.
 
 Andrew Tong Guest

Thanks very much, Andrew. 

 

Andrew Musgrave Host

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.