Increasing demand for critical metals like cobalt
With the US announcing the “made in America supply chain for critical metals” recently, Canada has followed suit and will invest $2 billion for the same – a move that is surely considered bullish for cobalt and copper penny stocks. On April 4th, Canada’s federal budget included this:
Canada’s federal budget will include an investment of at least C$2 billion ($1.6 billion) for a strategy to accelerate the production and processing of critical minerals needed for the electric vehicle (EV) battery supply chain, two senior government sources said.
Prime Minister Justin Trudeau’s government, which is due to release its budget on Thursday, will make the investment to ramp up the extraction of processing of critical minerals including nickel, lithium, cobalt and magnesium, said the sources who are familiar with the matter but were not authorized to speak on the record.
According to Reuters, World Bank estimates that demand for metals needed in batteries can increase by 500% by 2050:
Demand for minerals needed for batteries, including lithium and cobalt, could increase by almost 500% by 2050, the World Bank estimates.
In what is a persistent uptrend, Cobalt prices have continued to increase:
In a similar vein, copper continues to be near all-time-highs, as demand falls short of supply:
This has transpired despite concerns about demand from China:
Copper for delivery in May rose 2.3% from Friday’s settlement price, touching $4.790 per pound ($10,538 per tonne).
Trading was sluggish as Chinese financial markets were closed for a public holiday, but traders kept a wary eye on the country’s covid-19 lockdowns and their impact on economic output and overall demand.
“The lockdown in China “has already led to a slowdown in the domestic movement of base metals, (and) as a result, production cuts at metal fabricators have also been implemented,” commodity strategists at ANZ said in a note.
How to play this:
The expectation of $2 billion allocated in Canada’s budget for critical metals will be another layer to the existing announcement in the US. This will have a direct impact on any assets in North America that supply critical metals. Lithium is hugely popular, and may be viewed as a meme at this point. However, Cobalt is imperative and generally overlooked. A great way to capitalize off of this is to find early stage penny stocks that are exploring cobalt and/or any of the of critical minerals. We remain very bullish on GZD.
We like Grizzly Discoveries (TSXV: GZD) and their Robocop and Greenwood properties. Their Robocop property lies on the Purcell Supergroup, which has played host to past-producing stratabound Copper-Cobalt mines. Robocop has shown high grades of both copper and cobalt. Cobalt is extremely valuable in the production of electric vehicle batteries. It is an expensive and rare component, of which more than 65% of the global supply originates from the Democratic Republic of Congo. Robocop has had sample grades like 1.41% Cu, 0.62% and 0.134% Co, 1.19% Cu, with silver credits.
GZD is trading at an extreme discount at 9.5 c. While this is above the closing price of 6 c when our report was published, our research shows this stock to be worth at least 15 c using conservative estimates. It’s also important to note both copper and cobalt were trading at a lower price, meaning it is very reasonable to assume the target price may now be 18 c or 20 c.
You can read our full report here: https://www.tsxvresearch.com/research/gzd-cobalt-copper-tsxv/