In the past year, eCobalt’s stock price has dropped 42 per cent, but this recent decline is likely due to strategic missteps by management. This article examines the Company’s valuation, strategy to sell cobalt concentrate to China, and the company’s recent performance. We also discuss the company’s rival, Jervois Mining. This article contains an op-ed for investors, so read on to learn more.
eCobalt’s share price has declined 42 per cent in the past year
A recent shareholder letter from Tribeca Asset Management criticised eCobalt Solutions Inc. for its management and the company’s management’s decision to scrap a June feasibility study and commission a new one. The letter blamed the company for delays, capital expenditures and an inability to plan. It also pointed to the company’s inclusion on the US government’s strategic metals list, which is a negative for cobalt prices.
Cobalt is used in batteries and is currently mined as a byproduct. It is used in electric vehicles and was once found in the past silver mines of Ontario. Its price peaked in July at $57,000 per tonne on the London Metals Exchange, but has since declined to $69,750 a tonne. However, analysts still believe the price of cobalt will continue to rise as demand for it rises.
A Company’s valuation can be a useful tool in many business deals. It shows the company’s growth, the amount of assets withheld, and the actual market value of the company. As a result, many companies base their financial decisions on a higher valuation. Having a high Valuation makes it easier for the business to borrow money and increase its share price. A high valuation can mean a lucrative payday for the business owner and shareholders.
The asset-based formula determines a company’s value by calculating the value of the company’s assets and liabilities. These methods can include liquidation and going-concern values. The former involves paying off all debts and selling off the company’s assets and closing the business. The latter, or going concern, method, allows the business to continue operating. This method has the advantage of generating more accurate results when paired with the other methods.
Rival Jervois Mining
While many companies in the cobalt sector are still struggling, a look at the recent moves by rivals can give you an idea of what to expect from the company in the next few years. One company is Jervois Global Ltd., which is a global supplier of cobalt. It has a production facility in Finland, which is currently producing cobalt powder for electric batteries. In addition, the company is acquiring a shuttered cobalt and nickel refinery in Brazil. Its latest acquisition, Idaho Cobalt Operations, is scheduled to begin production in August 2022 and be commercially produced by December of the same year.
In January, Cobalt Blue and Jervois Mining had no major news releases, but the company also secured an option to purchase a brownfield site in the industrial heart of Alberta. In addition to its strategic position in the cobalt market, Jervois is benefiting from a strategic economic dialogue focused on rare earth and critical minerals. The Australian delegation met with the US Secretary of Commerce and CEOs of major critical minerals companies. As the cobalt price rises, Jervois is catching the wave.
eCobalt’s strategy to sell cobalt concentrate to China
The change in eCobalt’s strategy to produce cobalt concentrate is the result of the US government’s move to list the metal on its list of strategic metals. In September, the company scrapped a feasibility study it completed in June and commissioned a new one. The company blames delays in project development on capital expenditures, lack of planning, and other factors.
Earlier this year, the company’s strategy to sell cobalt concentrate and other materials to China was criticized by former CEO John Cleary, saying that the move may attract the U.S. government’s attention and might be counterproductive. The company has also seen a spike in cobalt prices fueled by the increasing demand for electric vehicles. Cobalt is a crucial component in batteries, and Tesla CEO Elon Musk has said he would like to reduce the amount of cobalt in its batteries.
Lithium Americas Corp.
The Lithium Corporation of America mined lithium-bearing ores in North Carolina and South Dakota. The company’s mines produce lithium spodumene and pegmatite. Despite the lack of lithium production, the company’s assets are still significant. Its shares have fallen more than 80 percent in the past year, a sign that investors have become skeptical. Still, investors should take note of Lithium Corporation of America’s business plan and its potential.
While lithium spot prices have remained steady for most of the year, the volatile stock market may have contributed to the recent broad-based pullback in lithium stocks. Although lithium stocks are generally down, investors have failed to differentiate between marginal and senior lithium miners. Nevertheless, the company is a solid play with excellent long-term prospects. Investors should consider Lithium Americas as a buy. This stock is currently worth around $3.20.