Red Mountain Mining’s maiden exploration program at the Mukabe-Kasari cobalt-copper project has failed to deliver “results sufficient to sustain a commercial operation”.

Shareholders didn’t like the news — selling down shares as much as 64.5 per cent to an intra-day low of 1c just after Friday’s market open, before recovering slightly to 1.3c at 11.30am AEDT.

RMX dropped 60 per cent today. They're down from a 52-week high of 4.8c in Jan 2017. Source:
RMX dropped 60 per cent today. They’re down from a 52-week high of 4.8c in Jan 2017. Source:

The Mukabe-Kasari project is a greenfields exploration play located about 70km north of one of the world’s biggest copper and cobalt resources, the Tenke-Fungerume mine in the Democratic Republic of the Congo.

While Red Mountain considered the project prospective because of its multiple showings of copper mineralisation, initial work also revealed cobalt grades of 0.3 to 0.4 per cent.

Cobalt grades above 0.1 per cent are considered economic; grades above 0.2 are average and grades of 0.3 and above are considered very good, especially with scale.

However, follow-up drilling that focused on potential cobalt mineralisation did not yield significant results.

‘Insufficient’ for commercial operation

“While anomalous levels of cobalt were detected across a meaningful area within the project area, such levels are insufficient to sustain a commercial cobalt operation,” Red Mountain told investors.

Cobalt has become the focus of explorers and investors more recently because of the predicted surge in demand stemming from the electric vehicle market.

Demand for cobalt is expected to increase eight-fold between now and 2025 due to its use in electric car batteries.

But the news isn’t all bad for Red Mountain — the maiden exploration program did unearth a new copper anomaly that stretches for over 12km and has been confirmed over three zones of geochemical sampling.

Red Mountain is now planning a targeted drilling campaign to determine the thickness and spacing of the mineralised zones.

The company has been contacted for comment.