RE: Cobalt18 May 2022 12:32
Jonah58, I agree that this cobalt plant seems like a pilot operation. Although, 1.2k tonnes is significant! However, it may also hold a benefit from a bank finance pov.
The main positive from the update was JLP have shown they are actually able to produce copper at scale. If they can do this for cobalt by Q3, that means any bank can look at the Leopard revenues (including cobalt) as much lower risk. Before this update, they were pretty high risk. No bank was going to say "oh ill lend to you based on future revenues that you say you can achieve with no evidence, even though recovering metals from tailings dumps isn't straightforward and many have failed before." Now, they can lend based on sizeable EBITDA from Inyoni, and Southern copper operations (including this extra Cobalt), with the comfort that this operation will more than double when JLP utilises an already developed method of Cobalt and Copper extraction at Leopard. Seems all of this makes any future equity raise unlikely. (In fact, JLP should be able to fund both the Northern copper strategy and new Eastern Limb plant from debt and current Inyoni and Sable cashflows.)
Homeytheclown, for me this was a big plus from the update, contrary to there being no good news. Given that Inyoni is now secure, and reliant on multiple long term feed agreements from different reef types, JLPs PGM cashflows are entirely de-risked, again hugely reducing the risk for any bank that wishes to finance future expansion. The reliance on one provider and limited reef-types before made bank financing based on the PGM operation impossible at reasonable rates.