It is not long ago that US cobalt explorer New World Cobalt (ASX: NWC) was riding high on the electric vehicle thematic.

Cobalt was selling for more than $US90,000/t and the battery makers were under pressure from the electric vehicle industry to ensure they sourced cobalt supplies from ethical sources – a long way of saying they wanted non-DRC supplies.

But then the DRC cranked up supply in response to the bumper prices and the price came tumbling down to below $US30,000/t, before the recent rally to $US33,000/t.

The pressure for non-DRC supplies has not gone away. It’s just that finding and developing a new non-DRC supply source has become much tougher to achieve without the inducement that comes from bumper prices.

Why not both?

It is against that backdrop that NWC’s share price has fallen away to 1.1c, valuing the company at $8.4m.

That’s not a lot on the strength of NWC’s highly rated cobalt Colson project on the Idaho cobalt belt in the US, considered the premier cobalt district in the Western world, and the subject of some corporate action by others in recent weeks.

But with investors clearly tuned out from the non-DRC cobalt thematic, NWC decided that rather moan about the lack of cobalt love, it should add a new opportunity to its portfolio.

“We are firm believers in the EV thematic, and we are firm believers in the recovery of the cobalt price in the near to medium term,’’ NWC’s chief executive, Mike Haynes, said last week.

“So while we wait for the cobalt price to improve we’ve deliberately elected to seek out a more advanced opportunity in the copper/gold sector.’’

Rewriting history

The search has led to NWC securing a low-cost option over the Tererro copper-gold-zinc project in central New Mexico, 120km to the north-east of Albuquerque.

It is an advanced project thanks to the historical work by some big name mining (Santa Fe) and oil companies (Conoco) at the Jones Hill deposit.

Close to 60 holes were drilled by the pair between 1974-1993, leading to a historical resource estimate for the volcanogenic massive sulphide (VMS) mineralisation of 5.78mt grading 1.96g/t gold, 1.02% copper, 1.46 zinc and 21.4g/t silver.

“It is a very good starting point,’’ Haynes said. “Think about the historical resource in gold equivalent terms, and it represents about 1m oz at 4.9g/t. Think about it in copper terms, and it’s 180,000t at 3%.”

But the historic resource is just that. It needs to be brought up to current reporting standards for mineral resources which Haynes estimates will involve the drilling of 5-10 confirming holes.

Initial funding for the New Mexico push was secured with the recent $2.2m two-for-five capital raising at 1c a share.

“It is an advanced high-grade historic resource and the grade gives us every chance of economically mining it,” Haynes said.

Apart from the upside at the Jones Hill deposit, NWC is excited about the potential for the broader Tererro area to host more VMS deposits.

“VMS deposits almost always occur in clusters, so where there is one, there is almost always another,’’ Haynes said. “This is an opportunity for us to develop a mining camp.’’

It was the existence of the historic Pecos mine (1927-1939) – 8km from Jones Hill – that attracted NWC to the region in the first place. The VMS mine produced 2.1mt at 13.1% zinc, 4% lead, 0.78% copper and 3.63g/t gold.

NWC is planning to cover the area to the south of Jones Hill in coming months with ground-based geophysics.

“Hopefully it will generate lookalike signatures to the Jones Hill deposit which will prioritise where to drill,’’ Haynes said.

NWC expects to start a drilling campaign in the December quarter. It will involve confirming and exploration drilling.