Geovic Mining Corp. (GMC:TSX) is an exploration stage mining company which trades on the Toronto Stock Exchange. Geovic Mining’s principal asset is a significant cobalt-nickel-manganese property which is located approximately 400 miles east of the seaport Douala, located in Cameroon, Africa. Geovic Mining owns 60% of seven related deposits located on a 775-square-mile mine permit through its GeoCam joint venture with the Cameroon government. This deposit is thought to be the world’s largest primary resource of cobalt.
Geovic has some definite positive factors in their favor with regard to this cobalt find. The mineral deposits that the company has discovered are unique in that they are located fairly near the surface. This should facilitate the use of inexpensive and highly efficient concentration and hydrometallurgical processing methods, unlike those of any other cobalt-nickel project in the world. This should keep capital costs and operating costs for the project rather low.
Another positive factor for Geovic is the company’s strong relationship with the Cameroon government. Cameroon, which is located in western Africa, is recognized as one of the most stable and business-friendly governments on the African continent. The agreement that Geovic signed with the government for 60% of the cobalt deposit is very reasonable in light of what many governments around the globe are doing with regard to natural resources found on their land.
If the project goes ahead as planned, Geovic stands to reap the benefits of strong demand for cobalt. Cobalt has many possible applications including: in alloys for jet turbine engine blades; in chemicals to make pigments and dyes; and in batteries for cell phones, computers, hybrid electric vehicles, etc. The fastest-growing use for cobalt is in both nickel metal hydride and lithium-ion rechargeable batteries.
The increased demand for cobalt, mainly from rechargeable batteries, has resulted in the price of cobalt rising from $7.50/lb. in 2003 to a high of $52.25/lb. in early 2008. The price of cobalt is currently in the mid-40s per pound. Geovic expects to begin reaping the benefits of the higher cobalt price in 2009 and 2010 as the company begins production at their Cameroon project. If all goes well, the company expects to be the largest producer of cobalt in the world.
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