Trilogy Metals TMQ Bornite 2

Trilogy Metals (TMQ, TMQ.TO) couldn’t resist joining the cobalt rush as the company has now completed a cobalt-focused resource estimate on its Bornite project in Alaska. After completing some geometallurgical studies and gaining a better understanding of the cobalt mineralization on the property, Trilogy Metals now feels sufficiently confident the cobalt could be recovered and provide a nice by-product credit to the copper-focused operations at the Bornite project.

The majority of the cobalt on the property is found in pyrite, and the cobalt mineralization appears to end up in the copper tails, so Trilogy will now start working on the possibility to produce a so-called cobaltiferous pyrite concentrate. This could be accomplished by adding an additional flotation stage to the process which would result in a cobalt-rich flotation product.

This won’t be the holy grail. Cobalt assays ranged from 0.01-0.04%, but there were some longer and higher grade intervals of 0.1-0.42% cobalt which could be more interesting. It’s still very early days, and although the production of cobalt could be a welcome addition for Trilogy Metals, the company needs to make sure putting an additional flotation circuit in would make sense (given the higher capital expenditures associated with the additions).

Trilogy Metals TMQ Bornite 1

The in-pit resource now contains almost 125 million tonnes with an average cobalt grade of 0.017%, for 45 million pounds of cobalt. A slightly higher grade (inferred) resource is located right underneath the pit, and contains an additional 32 million pounds of cobalt at an average grade of 0.025%.

Jumping on the cobalt bandwagon is one thing. Announcing a 77 million pound resource sounds great,  but with an average grade of 0.017%, the gross rock value (before recovery rates and payability rates) of the cobalt is just US$12-13/t (using a cobalt price of $35/pound). A great way to attract the attention from the market, but we think this won’t move the needle at all.

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The author has no position in Trilogy Metals. Please read the disclaimer

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