Cobalt is crucial to lithium-ion batteries, the rechargeable batteries that are seeing a rise in demand thanks to the burgeoning electric vehicles (EV) market. According to the corporate presentation of CBLT, Inc. (TSX-V:CBLT), the EV market will drive 20% of cobalt demand in 2020. Demand is currently paced by electronics, another area where cobalt is vital.
One of the problems manufacturers face is sourcing cobalt from ethical supply chains. The Democratic Republic of Congo, a war-torn and corrupt country frequently criticized for abusing worker's rights and using child labour in mining, is the world's top supplier of cobalt by long shot.
Manufacturers are starting to be held under a microscope by worker's rights organizations, including Amnesty International publishing information on whether or not companies like Apple (NASDAQ: AAPL), Samsung (OTCBB: SSNLF) and Tesla(NASDAQ: TSLA) are ensuring safe cobalt in their products.
With increased demand and scrutiny of the Congo, companies in the mining business are looking to capitalize. CBLT has benefited so far in 2018 by divesting non-core assets to Australian resource companies. The Burlington, Ontario-based company has closed cash-and-equity transactions with Winmar Resources Limited (ASX:WFE) and Krakatoa Resources (ASX:KTA) for which CBLT has received cash of AUD$270,000 (The Australian dollar and Canadian dollar are nearly at parity).
On Monday, CBLT said it closed the sale of non-core Ontario cobalt assets to International Cobalt Resources Limited (CSE:ICR), a privately-held Australian that intends to list on the ASX soon. In exchange for CBLT's MacTrack and Dickson assets, ICR has paid AUD$150,000 in cash and 500,000 shares of ICR valued at AUD$150,000. CBLT also gets 500,000 options to buy shares of ICR at AUD$0.60 once the company starts trading on the Australian Stock Exchange.
The sales have generated nearly $1 million in value for CBLT so far in 2018, inclusive of CBLT's current Australian equity holdings of roughly AUD$637,000. This total doesn't include the ICR options, which will be more accurately valued once the company lists on the ASX.
CBLT says it will continue to realize revenue going forward by collecting a 10% management fee for work to be carried out at the old CBLT properties in Ontario by Krakatoa, Winmar and ICR. Management estimates those fees should work out to about CDN$50,000 by the end of the year. The company also plans to divest its holding in Tempus Capital, which it estimates is worth roughly $80,000.
Shares of CBLT opened Monday at six cents.
