LiCo Energy Metals Reports 2nd Set of Good Drill Results

I’ve written about LiCo Energy Metals (TSX-V: LIC) / (OTCQB: WCTXF) /(FRA: 43W1several times this year; it’s one of the few energy metals companies that has both Lithium (“Li“) and Cobalt (“Co“) assets in multiple jurisdictions.  Today the Company released its 6th & 7th assays from 30 diamond drill holes on the adjacent — Glencore Bucke property and LiCo Teledyne project —  bringing the drilled total to about 3,700 meters.  

The first 5 drill holes were released to the market on November 8th, all 5 assays are from the Bucke property. 

Best Cobalt showings from 3 of the first 5 drill holes:

The first 5 holes demonstrated select areas of solid Co values and also pointed to the possibility of Copper (“Cu“), Silver (“Ag“) and Zinc (“Zn“) contributions in a potential open pit mining scenario.

Today’s announced results of 2 more assays adds to management’s excitement over Bucke & Teledyne. Here are select highlights of the 2 holes. 

  • GB17-07: 1.11% Co over 2.0 m, including 7.64% Co over 0.26 m
  • GB17-06: 4.45% Co over 0.30 m

President & CEO Tim Fernback commented in today’s press release, 

We are very pleased with the higher‐grade Cobalt mineralization that has been intersected at our Glencore Bucke property.  Not only have we intersected cobalt style mineralization in every drill hole completed, we are happy to report that 4 of the 7 holes assayed to date have higher than average grades of more than 1% cobalt. We are also finding very good silver and copper results in our assays which is equally exciting.”

On the Bucke property, the Company has completed a total of 21 diamond drill holes totaling 1,900 m, testing the Main and Northwest zones.  Drilling to date appears to have confirmed and extended the cobalt mineralization on the property, and the grades are consistent with historical grades and widths in the overall Cobalt Camp.  On the Company’s adjoining Teledyne project, a total of 1,828 m has been completed in 9 diamond drill holes.

The drill program was designed to provide management with sufficient drill hole information to create a geological model and a NI 43‐101 complaint resource estimate.  

Management believes that a maiden mineral resource estimate might require $2-$3 million worth of additional drilling next year.  If LiCo continues to report attractive drill results on Bucke and Teledyne, the chances of Glencore exercising its right to back into a 51% stake in Bucke, and reimbursing LiCo 3 times their exploration expenditures, will continue to rise.    

Glencore’s Bucke Property

As a reminder, LiCo entered into a property Purchase Agreement with Glencore Canada Corp. (a subsidiary of Glencore plc) to acquire a 100% interest in the Glencore Bucke Property.  Bucke is 16.2 hectares and sits along the west boundary of LiCo’s Teledyne project, covering the southern extension of the former producing 15 vein on the past-producing Agaunico Mine.  Agaunico produced 4,350,000 pounds Co and 980,000 ounces Ag during the mining boom of the early 1900’s (Cunningham-Dunlop, 1979).  NOTE:  {please click here for the Sept. 2017 NI 43-101 Technical Report on the Bucke property}

In the early 80’s, the Bucke property was explored by 36 surface diamond drill holes totaling 3,323 m.  The program outlined 2 vein systems hosting significant Co & Ag values, the Main Zone, measuring 152 m in length, and the Northwest Zone, measuring 70 m in length.  Notice on the map below the very close proximity of the Bucke property to infrastructure, most notably Teledyne’s development ramp and adit that extends 500 feet down, parallel to the vein.

LiCo’s Teledyne Project

Teledyne is a high-grade Cobalt project in a prolific past-producing Silver / Cobalt camp.  The optioned Property is ~6 km east-northeast of Cobalt, Ontario and consists of mining claims covering an area of ~607 ha.  It’s located within an historic mining area that was one of the world’s largest silver camps in the early 20th century.  An estimated 575 million troy ounces Ag and 30.8 million pounds Co have been produced to date.

The Property adjoins the south and west boundaries of claims that hosted the Agaunico Mine.  As mentioned above, from 1905 through to 1961, Agaunico produced a total of 4,350,000 pounds Co and 980,000 ounces Ag.  A significant portion of Co produced was from structures that extend southward towards the northern boundary of the Teledyne property currently under option to LiCo.

In 1980, former owner Teledyne Canada completed a 3 m (10 ft.) by 4 m (13 ft.) access decline at -15 degrees, for a length of 701 m (2,300 ft.), to reach mineralization encountered in their 1979-80 drill programs.  In addition, a total of 1,880 m (6,167 ft.) of underground drilling (22 holes) was completed.

Importantly, that drill program confirmed the extension of the Agaunico cobalt zone onto property optioned by LiCo, for a strike length of 152 m (500 ft.). The drill program also encountered a second zone with a strike length of 137 m (450 ft.) that included 0.64% Co over 16.9 m (55.4 ft.) and 2.59% Co over 2.4 m (8 ft.).

An estimated $25 million (inflation- adjusted) of prior work has been completed on the Teledyne Property, resulting in valuable infrastructure including a development ramp and a modern adit that descends ~152 m (500 ft.), parallel to the vein.

LiCo management is in the midst of closing a non‐brokered private placement of up to $960k (announced on October 24, 2017).  ​The private placement consists of up to 8 M flow‐through units and up to 4 M non flow‐through units, both priced at $0.08 per unit.  Each warrant will enable the holder to purchase an additional share at $0.10, for a period of two years.

Cobalt price continues to rise…. 

When I first started writing about LiCo Energy Metals (TSX-V: LIC) / (OTCQB: WCTXF), the cobalt price was about US$25/lb.  The current price is 25% higher, roughly US$31/lb.  This is the highest Co price since 2008, when it peaked above US$50/lb.  Yet, think about the difference in terms of the fundamental outlook for Cobalt in 2008 vs. 2017….  Green energy — wind & solar have clearly outperformed expectations from a decade ago.  

Growth in renewables like wind & solar is highly reliant on continued improvements in Li-ion battery powered grid-scale Energy Storage Systems.  

A decade ago, Tesla did not yet have its first winner (the Tesla Roadster) established in the market, few believed that Electric Vehicles (“EVs“) would represent more than a niche market.  Instead, we face nothing short of a paradigm shift in the global passenger transportation fleet.  Lithium spot prices in China are 4x higher than they were just 3 years ago.  Cobalt prices have tripled in the past 18 months.  All of this, yet global EV penetration is around 1%.

LiCo is in a the right place at the right time, a unique situation with its arrangement whereby Glencore can back into a 51% Interest in the Bucke property as soon as 2h 2018.  They would have to pay LiCo 3 times what is spent exploring the property — a figure that could amount to C$6 to C$9 million (just a guess on my part).  

Assuming for the sake of argument that Glencore pays C$7.5 M for a 51% stake, that means LiCo’s remaining half would be worth at least another C$7.5 M, but probably a lot more because of Glencore’s involvement.  So, that’s a minimum of C$15 M for the Bucke property alone (if Glencore backs in, which is far from a done deal!).

Conclusion

Imagine what a combined Bucke / Teledyne project could be worth with Glencore’s blessing …. Bucke is 16 hectares, Teledyne is an additional 607 hectares.  And, the Company continues to look at more property near Cobalt, Ontario.

The Company’s market cap is C$16 M, a figure that could comfortably be covered by the prospective valuation of the Bucke property alone.  That leaves investors today with free options on 2 Li projects in Nevada and a high potential toehold land position in Chile’s Atacama salar, the single best place on the planet to find lithium.     

Disclosures:  The content of this article is for illustrative and information purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice or a recommendation or solicitation to buy or sell any security. Mr. Epstein and [ER] are not responsible for investment actions taken by the reader. Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Readers understand and agree that investments in small cap stocks such as LiCo Energy Metals can result in a 100% loss of invested funds. It is assumed and agreed by readers that they consult with their own licensed and registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares in LiCo Energy Metals and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein should be viewed as biased in his views on the Company.  Readers understand and agree that they should conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.