Cazaly Resources is “unlikely” to go ahead with its previously flagged acquisition of the Tsumkwe project in Namibia after a review of historic data failed to produce any evidence of cobalt.
An initial analysis of data indicates “no significant cobalt mineralisation in historic drilling”, Cazaly (ASX:CAZ) told investors this morning.
The company’s share price jumped as much as 76.7 per cent in December after the junior ASX-listed explorer revealed it was buying the copper and cobalt project.
Cazaly secured a four-month option to acquire an 85 per cent stake in the Tsumkwe project from Gemco Investments for around $1.3 million cash and scrip.
Investors are going nuts over cobalt stocks because of the anticipated growth in supply needed to satisfy demand from electric vehicle makers.
As part of due diligence, Cazaly recently acquired a database of results from past drilling at the Tsumkwe project by Mount Burgess Mining.
The project is located in North Eastern Namibia — a region that has largely been explored for diamonds in the past with limited exploration for base metals.
Mount Burgess Mining, which has been active in the region since the late 1990s, uncovered 71 meters of cobalt and 45 meters of gallium in drilling undertaken in mid-2011.
Gallium is predominantly used in electronics, specifically microwave circuits, high-speed switching circuits and infrared circuits. It is also used to produce blue and violet light-emitting diodes and diode lasers.
Unfortunately for Cazaly, assays of samples from prior drilling at the Tsumkwe project were “largely negative for anomalous cobalt”.
Chemical assaying did however verify the gallium intercept.
Due diligence also could not confirm the presence of a nearby coincident copper-cobalt soil anomaly, although outcropping copper minerals were noted.
“Whilst the results are disappointing, Cazaly intends to undertake a thorough desktop analysis of the extensive database it has acquired over the project area,” the company said.
However, the company noted that on the basis of the results to date it is unlikely to exercise its option and acquire the project.
Cazaly has been contacted for comment.