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Cobalt Blue will not rush a final feasibility study on its Thackaringa cobalt project to meet a mid-2019 deadline – forfeiting its chance to grab full ownership of the project from its joint venture partner.

Cobalt Blue (ASX:COB) plummeted more than 20 per cent to 23c by mid-morning on the news. Its JV partner Broken Hill Holdings (ASX:BPL) suffered an 8 per cent dip to 4.6c.

A review of the project concluded that test-work, demonstration plants and feasibility studies would take up to two years, Cobalt Blue told investors.

The risk of attempting to fast-track such studies into a period of only a year to meet the final feasiblity timetable would “significantly impair the project and pose undesirable risk”.

“Subsequently, after a period of negotiations leading to no acceptable commercial outcomes, [Cobalt Blue] has now elected out of the earning period process of the farm-in agreement,” the company told investors.

“As a result, COB is unable to progress further within the earning period provisions in the farm-in agreement and has elected to stay within the joint venture as a 70 per cent partner.”

The Cobalt Blue (ASX:COB) share price over the past year.
The Cobalt Blue (ASX:COB) share price over the past year.

Broken Hill was considering the “validity, legality and practical implications of Cobalt Blue’s Notice”, the explorer said in a short statement to investors.

“Further information may be provided in due course.”

Cobalt Blue could have earnt up to 100 per cent of Thackaringa by hitting four milestones, shelling out $10.9 million in project expenditure before 30 June 2020, and paying Broken Hill $7.5 million in cash.

Broken Hill would also get 2 per cent profits of all cobalt produced.

Broken Hill has cash and cash equivalent of just $2.1 million at the end of June; Cobalt Blue had $9.7m.