Examining the Pullback in ECOBALT SOLUTIONS COM NPV (OTCMKTS:ECSIF)

Examining the Pullback in ECOBALT SOLUTIONS COM NPV (OTCMKTS:ECSIF)

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ECOBALT SOLUTIONS COM NPV (OTCMKTS:ECSIF) may have been flying under the radar, but this is a stock with eye-popping steady bullish performance over the past 18 months. ECSIF shares have consistently plowed higher in a steady move that has seen over 1,900% upside in that time. The company has been levered to the cobalt boom, which explains the strength. But this is an interesting angle on that story.

The company just announced positive economics from the Feasibility Study of the Company’s Idaho Cobalt Project, “the only environmentally permitted, primary cobalt project located in the United States. The FS is based on an underground mine with a target production rate of 800 short tons per day and a weighted average annual production of 2.4M lbs of cobalt, 3.3M lbs of copper and 3,000 oz of gold over a 12.5 year mine life with an estimated pre-production period of 24 months utilizing a 0.25% cobalt cut-off grade. The economic model uses a 34% corporate tax rate and a 7.5% discount rate, resulting in an after-tax NPV of $135.8M and an IRR of 21.3% using an average base case price of $26.65/lb for contained cobalt in cobalt sulphate.”

ECOBALT SOLUTIONS COM NPV (OTCMKTS:ECSIF) trumpets itself as a company committed to providing a unique opportunity for consumers to acquire an ethically sourced, environmentally sound, transparent supply of battery grade cobalt salts, essential for the rapidly growing rechargeable battery and renewable energy sectors, produced safely and responsibly in the United States.

The company is dedicated to the principles of environmentally sound mining and refining practices. Through its wholly-owned subsidiaries, it has interests in base and precious metals and uranium projects in Canada, United States and Mexico.

The Company’s primary asset is the 100% owned, fully NEPA permitted Idaho Cobalt Project (ICP). It is America’s only primary cobalt deposit. The ICP is comprised of the mine and mill near Salmon, Idaho and the proposed cobalt production facility for refining ICP mine concentrate in Blackfoot, Idaho. The ICP mine site is now fundamentally prepared to commence underground development contingent on successful conclusion of mine financing.

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As noted above, this has been a strong stock now in a clear corrective wave. The move lower seems to have followed the data released from the company’s feasibility study. However, it’s difficult to say whether this was an under-reported data set (ie, a miss), or if we are simply ready to “sell the news” after such a strong buy-the-rumor period in advance. Management commentary can offer some further perspective:

Mr. Paul Farquharson, President and C.E.O. of the Company stated: “After years of dedicated work, our Team is gratified the project is validated on a feasibility level enabling us the opportunity to strategically advance to the next stage and pursue project financing, construction and production. Pre-construction activities are underway in preparation for project construction and mine development contingent upon successful project financing. The project’s main competitive strengths are having a primary cobalt deposit located in the United States and a high reserve grade when compared to other existing sources of cobalt located globally. The feasibility study highlights multiple opportunities to enhance the economics of the project and these include expansion of the resource, optimization of the mine plan to process higher grade material and detailed engineering at the CPF to further reduce risk and improve capital and operating costs. This is a robust project that could eventually be the sole primary producer of cobalt in the United States. The future outlook for the electric vehicle and lithium-ion battery markets further supports sustained and long-term demand for cobalt – a critical ingredient in the cathodes of rechargeable batteries.  Our project is an important development for the battery supply chain enabling access to a secure, stable, ethically sourced and environmentally sound supply of battery grade cobalt sulphate, mined safely and responsibly in the United States.”

Recent action has seen more than -20% stripped out of share values of the stock over the past week of action. However, ECSIF is a stock with a strong recent history, and a past littered with sudden rips. Furthermore, the name has registered increased average transaction volume recently, with the past month seeing exceeding 110% above its longer-run average levels.

At this time, carrying a capital value in the market of $124.9M, ECSIF has a significant war chest ($17.7M) of cash on the books, which must be weighed relative to virtually no total current liabilities. The company is pre-revenue at this point. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $ECSIF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: We hold no position in $ECSIF, either long or short, and we have not been compensated for this article.

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