Cobalt's game-changer

Stock Watch

by Regina Meani

Market analyst Regina Meani discusses Cobalt Blue Holdings (ASX:COB).

Cobalt is used in numerous diverse commercial, industrial, and military applications, many of which are strategic and critical. On a global basis, the foremost use of cobalt is in rechargeable battery electrodes. Other major uses are superalloys used to make parts for gas turbine engines and is also used to make airbags in automobiles. It is a catalyst used by the petroleum and chemical industries; and there are many other applications and uses for the metal.

By far, the biggest producer of cobalt is DR Congo (more than 50%) followed by Russia, Australia, the Philippines, and Cuba.

The cobalt price completed a base in early 2021 and started tracking higher to gain more than 130%. The price is beginning to see a stretch in momentum but is not yet overbought enough to signal a sell. Indeed, we expect that the price which is currently around US$82000/T will continue to track higher over the short term and reach towards its all-time high area around US$95250/T. This would mean a further increase in price of at least 16% and potentially much more.

At its Broken Hill Cobalt project, Cobalt Blue Holdings (ASX: COB $0.72) boasts advanced technology that “book-ends” the parts of the process together and engineers them to extract cobalt. Their process is the only one of its kind in the world. The way it effectively and efficiently extracts cobalt from pyrite and difficult host minerals is a “game-changer”.

The share price for Cobalt Blue completed a base in early 2021 in tandem with the price for the metal and rose rapidly from 20c to 47c in a few weeks to stall in peaking momentum before reaching higher to 51.5c at the end of February 2021. By this time momentum had diverged and the price declined to find a turning point at 23c in August that year. Basing and consolidating the price forged higher through the previous resistance in the 47-51.5c area but in reaction to the breakthrough the price has become more volatile. This heightened volatility has remained within the parameters of the upward trend channel. The price may need to pause in its approach to its next resistance zone in the 85-90c area. Once through the price would gain the potential to head towards the peak zone in the $1.40-1.60 area and possibly beyond. A tight stop loss should be in place with support located at 64c and then in the 47-51.5c area.

Ends


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