Investors piled into Winmar Resources after the explorer raised $3.1 million to buy cobalt in the Congo and unveiled a new strategic advisor.

The shares (ASX:WFE) closed up 150 per cent at 1.5c on Tuesday — a four-year high — with just over a third of its shares changing hands.

Winmar appointed Singapore-based Airguide as a corporate advisor. Airguide has performed the same role in the  Democratic Republic of Congo (DRC) for popular lithium miner AVZ Minerals (ASX:AVZ).

Winmar raised $3.1 million in two private placements to build a war chest for acquisitions most likely to be in the DRC.

Airguide and its principals put in a combined $1.5 million.

Winmar's share price since it began switching codes.
Winmar’s share price over the past six months.

Trading on a hot reputation

Airguide, run by Michael Langford and David Robinson, will help Winmar to make deals for its prospective cobalt operations particularly in China.

The announcements were held up on Tuesday morning as the ASX asked for more details around how Airguide would be paid. It also wanted an assurance that a deal was not already in the offing.

Airguide will be paid in 100 million performance rights based on market cap targets. The first involves lifting the market cap from $12 million to $30 million. The final target is a $100 million market cap.

Winmar said the private placements, while diluting existing shareholders by 21 per cent, were at a price (0.5c) five times higher than the rights issue in October.

Until now Winmar was focused on a Canadian silver-cobalt project and its 70 per cent interest in an iron ore mining lease in Western Australia.

Winmar pulled out of a joint venture with Kimberley Diamonds last year and slashed its costs as it cast around for a new project.

By December it had struck a deal to acquire rights to 2240 hectares of mining claims in the historic high-grade Cobalt-Gowganda silver-cobalt mining district of eastern Ontario in Canada.

Winmar says this district is one of the most prospective for cobalt outside the DRC.

Indeed, it has become a focus for other cobalt-focused companies such as unlisted Battery Mineral Resources and dual-listed First Cobalt (TSXV/ASX:FCC).

Cobalt, so hot right now

Winmar is just one of 55 cobalt small and mid caps monitored by Stockhead, and is one of 31 that has seen its share price rise over the last 12 months.

Since Winmar’s first foray into cobalt in December last year, its share price is up 275 per cent.

Cobalt is a key ingredient in lithium-ion batteries.

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.

Heres a list of ASX-listed stocks with exposure to cobalt:

Ticker Name 12-month price change Price Mar 20, 2018 Price Mar 20, 2017* Market Cap
ARL ARDEA RESOURCES 1.725 1.635 0.6 148648496
CLQ CLEAN TEQ HOLDINGS 0.179245283019 1.25 1.06 848564480
FCC FIRST COBALT (*listed Nov 30, 2017) -0.258620689655 1.075 1.45 113927216
COB COBALT BLUE HOLDINGS 2.68965517241 1.07 0.29 111453896
PAN PANORAMIC RESOURCES 0.751893939394 0.555 0.3168 287581856
JRV JERVOIS MINING 7.2332761578 0.48 0.0583 95545664
MQR MARQUEE RESOURCES LIMITED 0.68085106383 0.395 0.235 13825000
BSX BLACKSTONE MINERALS 1.10810810811 0.39 0.185 36557812
N27 NORTHERN COBALT (*listed Sep 22, 2017) 0.8 0.36 0.2 15381845
NZC NZURI COPPER 0.203703703704 0.325 0.27 97267616
AML AEON METALS 0.421052631579 0.27 0.19 158211824
HAV HAVILAH RESOURCES -0.593368783234 0.26 0.6394 56744752
CDU CUDECO -0.356164383562 0.235 0.365 92655376
SGQ ST GEORGE MINING 0.344827586207 0.195 0.145 50109216
ZNC ZENITH MINERALS 0.461538461538 0.19 0.13 42552424
MTC METALSTECH -0.320754716981 0.18 0.265 17657400
GME GME RESOURCES 0.987951807229 0.165 0.083 74175416
BMT BERKUT MINERALS -0.491228070175 0.145 0.285 8147500
PGM PLATINA RESOURCES -0.0740740740741 0.125 0.135 34336412
CLL COLLERINA COBALT 6.8125 0.125 0.016 66075456
CLA CELSIUS RESOURCES 2.59375 0.115 0.032 68089920
AXE ARCHER EXPLORATION 0.4 0.105 0.075 19780180
BPL BROKEN HILL PROSPECTING 1.38095238095 0.1 0.042 15516207
EUC EUROPEAN COBALT 1.22222222222 0.1 0.045 76169736
AUZ AUSTRALIAN MINES 3.7619047619 0.1 0.021 281169376
LFR LONGFORD RESOURCES 0.610169491525 0.095 0.059 42019792
HIG HIGHLANDS PACIFIC 0.40625 0.09 0.064 82667688
RIE RIEDEL RESOURCES 1.6953125 0.069 0.0256 27592600
HGM HIGH GRADE METALS 1.34782608696 0.054 0.023 26723334
BAR BARRA RESOURCES -0.315789473684 0.052 0.076 26056134
MLM METALLICA MINERALS -0.189655172414 0.047 0.058 15799918
HMX HAMMER METALS -0.12962962963 0.047 0.054 12370566
MTH MITHRIL RESOURCES -0.25 0.045 0.06 5918941
CNJ CONICO -0.2 0.044 0.055 13586722
CCZ CASTILLO COPPER 1.15 0.043 0.02 25524156
MEI METEORIC RESOURCES NL 2.15384615385 0.041 0.013 25023054
CFE CAPE LAMBERT RESOURCES 0.205882352941 0.041 0.034 38204608
KOR KORAB RESOURCES 0.4 0.035 0.025 10477459
FEL FE 0.129032258065 0.035 0.031 13986488
PIO PIONEER RESOURCES 0.0833333333333 0.026 0.024 37171384
ANW AUS TIN MINING 1.36363636364 0.026 0.011 49079268
THX THUNDELARRA -0.616666666667 0.023 0.06 15242301
TKM TREK METALS -0.56862745098 0.022 0.051 6558376
VIC VICTORY MINES -0.0555555555556 0.017 0.018 22066492
WFE WINMAR RESOURCES 2 0.015 0.005 11986166
CZN CORAZON MINING -0.6 0.012 0.03 16448683
RIR RIVA RESOURCES -0.398907103825 0.011 0.0183 30842610
LRS LATIN RESOURCES -0.285714285714 0.01 0.014 28846028
AYR ALLOY RESOURCES 0.25 0.01 0.008 10460678
RMX RED MOUNTAIN MINING -0.727272727273 0.009 0.033 5602331
VML VITAL METALS -0.470588235294 0.009 0.017 11877201
AZI ALTA ZINC -0.80343980344 0.008 0.0407 7673669
CGM COUGAR METALS NL -0.4 0.006 0.01 5506816
WCN WHITE CLIFF MINERALS -0.347826086957 0.0045 0.0069 12703272
BDI BLINA MINERALS NL 0 0.001 0.001 4313882.5

To DRC or not to DRC

The DRC however has split investors, with some saying it’s the best cobalt location in the world and others eyeing its political problems with caution.

Julian Babarczy of Regal Funds Management says the DRC  has the best cobalt geology globally and represents the vast bulk of current global production.

But issues such as political risk and poor mining practices, including child labour, mean that end users of cobalt are seeking supply sources from outside the DRC.

“DRC located cobalt assets will generally trade at a discount to non-DRC located cobalt assets to reflect the lower perceived risk,” he told Stockhead.

Statements from the government that it might increase taxes on cobalt production could reduce the economic benefits for DRC mining companies.

“As the bulk of cobalt currently comes from the DRC, it also means that the cost curve will structurally shift higher, which helps support economics on higher cost non DRC cobalt mines.”

Winmar managing director Rod Sainty says Jason Brewer, appointed as chairman in November, had initially introduced the DRC as a possible location.

“I was initially skeptical, I will be honest. Is this a place we want to take Winmar? We’re taking cautious first steps and the reports that we’re receiving to date are encouraging. We are gaining confidence that we will be able to find and secure an exciting resource project in this region which is rich in existing mines and infrastructure”, he told Stockhead.

But he also says that even with the tax increase the DRC would still be a low tax environment compared to other countries.

“From our understanding the political situation is stable enough that [the DRC] demands our attention,” he said.

“We see value in a two pronged attack in both Canada and the Congo, which will diversify our cobalt assets across two different geographic and political environments.”