Cazaly Resources’ share price jumped as much as 76.7 per cent on Tuesday after the junior ASX-listed explorer revealed it is buying a copper and cobalt project in Namibia.

The company (ASX:CAZ) has 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 at the moment because of the anticipated growth in supply needed to satisfy demand driven by the electric vehicle revolution.

Cazaly’s share price hit an intra-day high of 7.6c — up from a 52-week low of 3.2c in August — before retracing some of its gains back to 5.5c. Shares ended the day nearly 28 per cent higher.

CAZ shares over the past six months. Source:
CAZ shares over the past six months. Source:

Demand for cobalt is expected to grow because of its use in lithium cobalt oxide electrodes — a common lithium ion battery technology used in electric cars.

Bloomberg New Energy Finance estimates electric cars will account for 2 per cent of the market by 2020, rising to 8 per cent by 2025 and 20 per cent by 2030.

The Tsumkwe 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.

However, 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.

An infill soil geochemical survey assayed for cobalt for the first time in the June quarter of 2011 also uncovered a 3km-long copper-cobalt anomaly.

Mount Burgess never followed up on the cobalt potential of the project given the high demand for iron ore at the time.

“While we are yet to verify the cobalt and gallium intercept, we are nonetheless encouraged by the potential of this project which has had no follow-up cobalt work as historically the primary focus was on iron mineralisation,” managing director Nathan McMahon told investors.

Cazaly plans to undertake due diligence on the Tsumkwe project early in the new year.

Other cobalt movers

Korab Resources (ASX:KOR) climbed 15.4 per cent to 3c on Tuesday after it told investors it had confirmed high grade cobalt at the Batchelor project near Darwin in the Northern Territory.

Multiple holes drilled in recent reverse circulation drilling returned cobalt, copper, scandium, gold and manganese mineralisation.

Celsius Resources (ASX:CLA), meanwhile, made modest gains on news it had completed resource drilling at the Opuwo cobalt project in Namibia.

The company’s share price hit an intra-day peak of 9.9c — a 3.1 per cent gain over the prior day.

Celsius drilled 17,266 meters across 99 holes in an effort to define a maiden resource for the Opuwo project. The company expects to deliver a resource in February.