“The Chinese go into countries long term and help communities by providing infrastructure and other services. At Cobalt 27 we found that the investment horizon was very short for many of our investors, and this trend can be seen more and more in the mining sector today.”
How did the Cobalt 27 acquisition lead to the creation of Conic Metals?
The largest shareholder of Cobalt 27 was a Swiss investment group, Pala Investments. In April 2019, they approached us with an unsolicited offer for the company. Discussions with shareholders led to a revised and improved offer for two of Cobalt 27’s assets and the transaction was concluded on 25 October 2019. That left us with a joint venture interest in Ramu, our nickel-cobalt project in Papua New Guinea, and a collection of 11 other royalties, including Dumont, a nickel-cobalt project in Québec, and the Turnagain project in British Columbia, as well as other royalties in Canada and Australia. We created Conic Metals Corp., a new public company to hold those assets, and started trading on the TSX Venture Exchange in November 2019. Conic is an acronym for cobalt and nickel together, so that there can be no confusion in the company’s focus.
What interest does Conic have in the Ramu mine in Papua New Guinea?
We have an 8.56% joint venture interest in the Ramu nickel-cobalt operation. It is run by the Metallurgical Corporation of China (MCC), which is a subsidiary of the China Metallurgical Group Corporation, a Chinese state-owned enterprise publicly listed in Hong Kong and Singapore. MCC is a global construction and engineering firm and has been operating the mine since 2012. Based on resources, Ramu has a 30-year mine life and is one of the top 10 nickel-cobalt projects in the world. Nickel is one of the few base metal commodities that has performed exceptionally well over the last six months and Ramu continues to generate significant free cash flow.
Which of Conic’s royalties do you see particular potential in?
The biggest royalty Conic received is from Dumont, a construction-ready, fully-permitted, nickel-cobalt mine in Québec. It is a joint venture between Waterton and RNC Minerals. The second significant royalty is the Turnagain nickel-cobalt project in British Columbia, which is owned by Giga Metals. Companies such as Tesla are looking for ethical and clean sources of nickel and cobalt, and Dumont and Turnagain are perfect projects for that. In addition, Conic has royalties in Australia – the Flemington project, owned by Australian Mines, and Nyngan, a nickel-cobalt-scandium project, owned by Scandium International Mining.
Why do you think Chinese investors seem to have a more long term vision than their North American counterparts?
China has been investing in projects such as Ramu, as well as projects in Indonesia and the Philippines, but does not have a big stake in Class 1 nickel projects – the higher quality nickel that is required for batteries. The Chinese go into countries long term and help communities by providing infrastructure and other services. At Cobalt 27 we found that the investment horizon was very short for many of our investors, and this trend can be seen more and more in the mining sector today. Conic regards having MCC as a partner in Ramu as a significant benefit. Not only has MCC done a tremendous job building and operating Ramu, China is the largest foreign investor in Papua New Guinea by a wide margin and MCC continues to invest in local infrastructure and community projects to benefit the local communities around the Ramu operation.
Where would you like to see Conic Metals by the end of 2020?
By the end of 2020, we will ensure investors are significantly better educated on the quality and value of our Ramu joint venture interest and royalty portfolio. At the same time, Conic will continue to work with our Chinese partners to evaluate opportunities to bring forward some of the Ramu cash flow directly into the company, and/or to repay our existing JV debt. Once that debt is repaid, the company stake in Ramu automatically increases to 11.3%. In addition, Conic will continue searching for new royalty, streaming and other investment opportunities, with a particular focus on nickel and cobalt.