Jervois Global (ASX: JRV) (TSX-V: JRV) (OTC: JRVMF) shares are up 30% today. JRV shares rose on the announcement that they’re continuing to drill and explore that cobalt mine and deposit in Idaho. If we’re honest about this we don’t really see a great deal of point to this. On the other hand it’s other peoples’ money, not shareholders, so why not spend it if it’s available? There might be, could be, something that will come of it after all.
The announcement is: “Jervois Global Limited (“Jervois”) (ASX: JRV) (TSX-V: JRV) (OTC: JRVMF) has commenced its underground resource extension programme at the RAM deposit, via its local mining contractor Small Mine Development. The RAM resource extension programme will involve the commenced construction of an underground exploration drift as well as the extensional drilling to define potential step-outs from the existing RAM mineral resource” and so on. And we don’t really think much of this for a reason we’ll come to. Quite the most important part to us is this: “Based on the existing U.S. Department of Defense (“DoD”) US$15.0 million funding agreement (the “Agreement Funding”), Jervois anticipates its costs for these exploration programmes, up to the end of Q3 2024 for exploration development, drilling, logging, assaying, MRE modelling and other related costs, to be fully reimbursed.”
So, spending other peoples’ money. No skin off shareholders’ noses that the exploration gets done. There’s the vague idea there might be some benefit so why not?
Jervois Global share price from Google Finance
The reason we’re not very excited is this about Jervois Global: “Jervois Global (ASX: JRV) (OTCQX: JRVMF) has decided that the Idaho Cobalt Project simply isn't worth doing at present. They've therefore stopped construction and will not be, in this immediate near future, mining the project. This will confuse many - but surely we need all that cobalt for the batteries which will bring on that glorious electric future? And indeed we do. But this is a very useful lesson in how minor metals markets work. There are two specific issues to think of here, one a general one about how big the Earth is, the other the economics of byproduct metals. That first - sure, demand for cobalt has risen, so did the price. So, many go looking for more cobalt - as Jervois did. The bit that people forget is that many will find cobalt, as Jervois did. Because the Earth is very large, there really is a lot of any specific mineral out there. The shortage is always of people actually digging it up, not of the mineral itself. So, the cobalt price has come back down again - in fact, it's below production cost.”
We don’t think that finding more cobalt that is uneconomic to extract is all that value additive ourselves. We’ve also heard a rumour - a rumour, nothing else - that Jervois misunderstood the chemistry of the deposit and that they can’t, in fact, process their ore in the plant they’ve got. According to that gossip network there’s some contaminant in there that they can’t deal with.
But, if you’re spending government money then why not? We’re just not sure that the results are likely to be value additive. If cobalt’s not worth mining - and it isn’t for most people, not just for this mine - then finding more of it, even if they do, isn’t all that interesting, is it?
