Katanga Mining is not your average junior exploration company. Its 26.56% move higher Friday captured the Daily Stock Challenge Breakout award in April’s Stock Challenge; but, a one-day move in its stock price is only one small part of the story. For starters, the company is in production and is one of just a handful global enterprises producing cobalt. Cobalt is the latest metal to capture the imagination of investors on the TSX Venture.
Markets & Money published an article in late February titled Why Cobalt Is the Hottest Commodity on the ASX. Many have tried to draw Tesla to the junior mining sector, be it through lithium or cobalt. It started with lithium in 2015 and 2016. Check out the below excerpt from the M&M article:
“Instead, Tesla has committed to a different type of battery for years. It has a lithium-nickel-cobalt-aluminium oxide chemistry (NCA). Typically, lithium-ion NCA batteries use a combination of 80% nickel, 15% cobalt and 5% aluminum, according to batteryuniversity.com. NCA batteries require more cobalt than NMC batteries.”
Cobalt has dozens of applications, but there is only one that has investors tripping over each other to get in: batteries. Markets & Money was kind enough to put together a pie chart on its demand:
Some cobalt-related stocks have broken out on the TSX and TSX Venture in 2017. Lithium stocks, step aside. Now, back to Katanga Mining, a company that is, in some ways, miles ahead of most junior cobalt deals, if only because of its production potential. The company’s stock has had a wild ride in 2017 after a quiet 2016.
Katanga Mining – 1 Year Chart
Katanga Mining has 1.91 billion shares outstanding and a market cap of approximately $772 million.
The company operates a large-scale copper-cobalt mine complex in the Democratic Republic of Congo (DRC) through two joint ventures, Kamoto Copper Company (KCC) and DRC Copper and Cobalt Project (DCP). According to the company, it has the potential to become Africa’s largest copper producer and the world’s largest cobalt producer. World’s largest of anything is always a tantalizing opportunity.
Note: Estimates put the Democratic Republic of Congo at having 10% of the world’s copper and 50% of its cobalt.
Finally, according to the company’s website:
“The Kamoto Project includes exploration and mining properties, the Kamoto concentrator, the Luilu metallurgical plant, the Kamoto underground mine and two oxide open pit resources in the Kolwezi district of the DRC. The Kamoto Project commenced commercial production on June 1, 2008 following the completion of operational commissioning of the initial phase of development. DCP’s assets include mining properties and various oxide open pit resources, the largest of which is the KOV pit. The KOV pit is not yet in commercial production.”
source: http://www.katangamining.com/operations/project-overview.aspx
Katanga Mining’s large-scale Copper-Cobalt mine complex Location
Despite the massive move higher in Katanga’s stock Friday, the company has yet to release any news. The company’s latest press release is from February 22nd, when it “confirms that as of the date of this news release there are no corporate developments that would cause the recent movements in the Company’s share price.”
In early January, investment advisor, Matt Bohlsen published, Katanga Mining Is A Potential Turnaround Story on Seeking Alpha. His top three summarizing points tell a story of a company in the struggle:
- “Katanga Mining has many problems right now – their mine is closed, their debt is very high, and the copper and cobalt prices are still too low for them.
- Katanga has large copper and cobalt reserves, are significantly lowering their cost of production, and should be back in production in 2018.
- At current copper and cobalt prices valuation is fair, however a small increases in price makes a huge difference to Katanga’s valuation, and vice versa.”
Click here to read Katanga Mining Is A Potential Turnaround Story.
It is clear that interest will continue to be high in Katanga and other cobalt producers as investors look for exposure to the materials that supply the growing electric vehicle battery market.
Katanga Mining tops charts in April’s Stock Challenge
Katanga Mining was the top performing stock in April’s Stock Challenge Friday. The cobalt producer jumped 26.56% to close at $0.405 per share on huge volume of 4.7 million shares traded.
Two Pinnacle members ‘terrysteen‘ and long-time member ‘funtime‘ selected Katanga for April’s Challenge. terrysteen topped all Challengers Friday with a 17.23% return. Both members now have a greater than 21% combined average thus far in April. Despite Katanga’s move, they are both chasing ‘savage31‘s 21.73% return.
