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ASX just the tip - Big call for 2018

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Todays tip is in what I think will be the best performing space in 2018, a cheap development ready co
 

ASX just the tip

November 28 · Issue #11 · View online
ASX just the tip -Companies I am buying and my reasons for doing so.

Todays tip is in what I think will be the best performing space in 2018, a cheap development ready cobalt play.

So my next tip is NZC
Before I talk about the company I want explain why I think cobalt is going to be the biggest mover in 2018, 2019, 2020 right now cobalt is at the start of a multiyear run that will rival if not exceed the recent lithium run.
Here are two recent cobalt experts summarizing the situation in interviews that have been done very recently within the last 2 weeks.
https://www.youtube.com/watch?v=eooo8yezOFI&t=1s
https://www.youtube.com/watch?v=snkO3fXAiTM&t=1s
They do a better job than I can at quickly explaining the impending cobalt crunch.
So what is NZC it’s copper cobalt deposit in the DRC that is currently pushing toward production, it’s has and ore reserve and a completed 
Lets have a look at the resource
So what does this mean in terms of cobalt exposure and how does it stack up to the competition?
In terms of contained cobalt the amount of cobalt available to you to pull out of the ground it stacks up very well consider it has a tonnage size considerably smaller than most others, that means you strip a smaller area, dig up less material, process less material and dispose of far less waste than anyone else.
When we look at cross sections we see important things here it’s shallow from surface, it’s thick long intercepts, low strip, consistent it’s the dream in terms of ability to mine it.
Have a look at some of these significant drill holes tell me if you have seen anything like them in recent times, I have not these are stunning past drill holes, if this was an exploration project and they were drilling today NZC would be a $150-$200mill Mcap easy.

So we confirm the actual deposit is a peach it won’t have any mining issues open pit shallow consistent all that it looks beautiful in terms of ability to mine.
So where is this project is it in some horrid part of the DRC, no it’s what I like to call copper Disney land, monster deposit after monster deposit have been found in this area, see 15km north there, thats owned by a little company call Ivanhoe were worth around $400mill odd before drilling there last year they have near 10 bagged since then.
I think AVZ has recently opened some eyes that there is serious money to be made in the DRC and if our neighbor 15km away is worth $3.6 billion, I think we are safe operating where we are.
Does NZC have any exploration upside?? fuck yes, they have been drilling and actually are still drilling, but I don’t want to harp on that cause, I see NZC as being good enough already to head to production, hit something great but it doesn’t change much I already know it has exploration potentail, the focus has to be production.
Like TAW speed take advantage of the current market to get to production as quickly as possible get cash flow positive, then use that cash drill out every inch and find exacly what else is hiding or go shopping for additonal projects.
So resource is compartiable in actual contained metal to other plays about even though it seems smaller it ain’t, it also has remarkable exploration potential lets have a look at the completed DFS
First thing I want to say about the DFS is it’s done finished completely paid for, these laterite projects that people are investing in crazily recently these projects to achieve a DFS with the lab work and drilling out 5km of strike we are talking $30-$50mill to get to a completed DFS, then we are talking who know $10mill maybe more for these pilot plants to do proof of concept, a laterlite deposit the DFS and pilot plant costs more time and money than it will for NZC to build their plant.
That has to be considered as part of the overall capex for these projects, the capital intensity and opex requirements for a HPAL laterite project are immense, you have to consider total dilution when looking at end game returns.
Now the DFS these numbers to me look meh for a $40mill Mcap company it’s got a double in it, but this to me is just like another company TAW similar situation.
If we approach this and look at it like a typical brainless number crunching dildo we would pass pass pass, but take a closer inspection and we will see there is alot more going on here.
Firstly pretty obvious $18 cobalt price well under current $29 price the stage 1 LOM is only 7 years at this point cobalt isn’t going to be anywhere near $18 a pound in the next 7 years it’s more like to be $100 than $18, so that obviously off very off.
Transport has been costed out to a smelter 377km away at $67million life of mine, I know for a fact there are smelters which are much closer within 50km of the project which are very viable options the cost difference between 377km and 50km is hufe, they have been very conservative here with these costs.
The most bit thought is that little note at the top there in brackets kalongwe stage 1 just like with TAW how they can quickly cheaply incorporate a fines circuit NZC has and option to leach the same material that went through the DMS circuit in stage 1 to extract extra addition copper cobalt and provide additional revenue that will be kalongwe stage 2.
So right there you can add another 7 years of mine life to the project that hasn’t been accounted for in this DFS.
Here are some estimates of addition revenue kindly provided by hotcopper poster mineralised.
That would result in an extra $367million of revenue for the company life mine that is currently not accounted for in the NPV.
That once combined with realistic cobalt pricing, actual transport costs to the smelter they will likely make a deal with, I can see the eventual NPV pushing $400Mill AUD, and one thing that doesn’t account for is cobalt prices in 2018 beyond which will be going one way up.
The downside…. the only downside to this project is the location the dreaded DRC whenever it’s mentioned I see talk of child miners, is it part of NZC plan to use child miners??no obviously not, companies like NZC are the solution to child mining not the cause of it.
I constantly see people posting well you know they have children mining there can’t invest, well actually NZC will provide jobs to people provide health care and education for their children we are taking children out of the ditches not putting them in them, the logic of associating child mining with companies like NZC is astoundingly stupid.
Are there any other reasons I like NZC yes
Small free float in this one major holder Tembo capital, they are obviously committed you aren’t exiting that position are you, sprott in there a few others this one is tight and well supported it’s not going anywhere but to production.
They have a clear development path, get financing/offtakes start building start producing and keep expanding become.

And most importantly the market cap when looking at peers its the best deposit looking at the sector where they are headed, it’s just cheap thats it.
I am happy to hold NZC as my primary cobalt exposure moving forward I think the big news will be offtake/financing that will slap the market in the face and say these guys really are going to be producer, after that share price will take care of itself.
For me this is a very low risk hold with plenty of cobalt upside over a potential 3-12month time frame I would like to see $1+ during that time for NZC as one of the asx very few realistic cobalt producers.
Cheers T54
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