This sex toy maker is now a cobalt and copper miner
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We’ve seen some extreme transitions as companies do whatever they can to stay in business, but probably none quite as quirky as this.
Sex toy seller Delecta (ASX:DLC) is now in mining.
Delecta told investors this morning that it had decided to go ahead with the acquisition of a cobalt and copper mine in Nevada, US.
The decision to acquire the mine came after due diligence showed high grades of up to 3.5 per cent cobalt and 36.7 per cent copper.
In general, anything over 2 per cent cobalt and 1.5 per cent copper is high grade.
The mine, which sits next to projects held by Aussie small cap explorers New World Cobalt (ASX:NWC) and Tyranna Resources (ASX:TYX), was a small-scale producer between 1917 and 1921.
The mine was producing at grades of as high as 12.45 per cent cobalt and averaged a grade of 35 per cent copper.
The news didn’t budge shares, which were trading at 0.7c on Wednesday morning.
Delecta previously wholesaled sex toys via its Melbourne-based adult store Calvista, but wasn’t doing so well.
The company fell into the red with a $2.5m loss in FY18 from a $1.4m profit a year earlier. Revenue fell 14 per cent to $15.8m.
Delecta blamed the poor 12-month result on the loss of distribution rights from a key supplier and a change in the group’s warehouse computer system.
Its most recent quarterly shows a cash balance of $741,000 at the end of 2018 and an expected cash burn of $4.5m for the current quarter.
This quarter Delecta forecasts it will spend nearly $3m on product manufacturing and operating costs and about $1.3m on staff and admin.
Meanwhile, receipts from customers from the last quarter amounted to $5.1m.
Managing director Malcolm Day said the acquisition of the “Highline” project was part of Delecta’s diversification strategy “aimed at capitalising on the demand for battery minerals such as cobalt, lithium and vanadium”.
Delecta announced the planned acquisition in September last year.
It already owned a stake in European Lithium (ASX:EUR) and wanted to delve further into the battery minerals space.
Besides its adult product business, Delecta also part-owns an oil well in Oklahoma.
But the commercial viability of the oil well was questionable, and the company was looking to drop the project.