Fuse Cobalt Inc. (TSXV: FUSE) (OTCQB: FUSEF) shares are rallying in September to price levels not seen since November of last year. And the more impressive part of its run is that the gains come despite decidedly bearish market conditions, especially in the nano and smallcap sectors where stock prices have been unmercifully bruised. But breaking from the pack, FUSEF stock is substantially higher, recently scoring 62% gains on more than 19X average volume on August 26th. Those subscribing to the adage “volume precedes price” may therefore have a reason to be bullish.
Actually, they have several. FUSEF provided a series of updates signaling its intention to capitalize on potentially massive opportunities in a red-hot EV and battery metals sector. The more excellent news, Fuse Cobalt looks better positioned than ever to maximize those opportunities by investing in properties within the world’s most mining-friendly jurisdictions whose legacy of prior mining success could put significant revenue potential in FUSEF’s crosshairs.
That’s the near-term attraction. But it’s only one part of the bullish FUSEF equation. Company updates support the opinion that FUSEF is possibly one of the green-energy sector’s most undervalued junior-miner investment opportunities. And with evidence supporting that case, FUSEF may present an investment opportunity too good to ignore.
A Mission To Monetize Opportunities
It’s a timely one too. Last week, FUSEF announced that Simcoe Geoscience of Stouffville, Ontario completed a detailed induced polarization geophysical survey utilizing the Alpha IP Wireless Time Domain Distributed Technology System at its Glencore/Bucke Project at Cobalt, Ontario.
According to FUSEF, results were encouraging, with preliminary 2D profiles and an early 3D model showing promising chargeability results evident. The final report, including final results and recommendations, is expected to be published by the end of the month. The objective is to resolve narrow vein cobalt and silver mineralization and cross-cutting structures to a depth of approximately 125m on 400m long across grid lines with a 50m line spacing. Previous drilling has indicated veins to be present at least 100m from the surface, and this most recent survey will assist in determining if the mineralization continues both up and down dip along the structures. The technical team will correlate the new IP geophysical data with the existing drillhole database to create new drill targets for the upcoming drill program.
The survey may also assist in identifying volcanic-hosted massive sulphide (VHMS) mineralization by tracing/correlating polymetallic intersections in drill holes GB 18-44 and GB 18-45 to the IP results. While there has been no success to date in locating economic VHMS deposits in the Cobalt camp, the possibility should not be dismissed, according to a Ni 42-101 report by Joerg Kleinboeck P. Geo and David Jamieson, P. Geo, on the Glencore/Bucke and Teledyne Properties from February 2021. It showed that step out hole GB 18-44 intersected visible cobalt mineralization returned 0.11% Co, 9.4 g/t Ag, and 1.04% Cu over 8.40m from 110.60 to 119.00m.
Mr. Robert Setter, Fuse’s President & CEO, commented on the project and survey, saying, “The geophysical survey was the first part of an approximate $500,000 exploration spend. Results received to date in this program are highly encouraging, and we eagerly await conclusions and recommendations from the final geophysical report. The next phase will involve the laying out of drill locations for an estimated 1800m of diamond drilling scheduled to take place once the geophysical results are integrated into our pre-existing data bases. Drilling is scheduled to take place over a 3-4 week period and the assay results should follow in a further 6-8 weeks.”
It’s part of a Fuse Cobalt company in motion.
Recent Updates Support Growth
And the best news may come as a product of FUSEF’s properties being situated near historically proven reserves. In fact, Fuse’s 100% interest in the Glencore Bucke Property alone could be a substantial value driver in the coming weeks and quarters. That property consists of two patented mining claims totaling approximately 16.2 hectares (about 40 miles) located west of and contiguous to its Teledyne Cobalt Project. Investors should also know that the Teledyne leased mining claim 585, now the “Glencore Bucke Property,” traces back to initial development through Falconbridge Nickel Mines Ltd. And while it was an excellent prospect and property then, it’s better now, with enhanced exploration and monetization potential from accessible southern extensions of veins from the Cobalt Contact Mine property. Remember, in the mining sector, past performance is an excellent predictor of future success.
Fuse is trying to prove that point. Work completed at its Glencore Bucke property delineated two mineralized zones, the Main Zone and Northwest Zone, measuring 500 ft (152.4 m) and 200 ft (70.0 m) in length, respectively. Both can be value drivers. By the way, before the 2022 mineral exploration season, FUSEF completed 21 diamond drill holes as part of its first phase of drilling intended to confirm and extend the existing known mineralized zones on the property. Results and highlights from that 2017 diamond drill program include but are not limited to:
Note: The above intervals represent core length and not the true width of the structures or intervals. Sample and assay information was taken from the NI 43-101 Technical Report on the Teledyne Cobalt and Glencore Bucke Project on Feb 4, 2021. Bolded Intervals represent grade composites.
That’s not all indicating chances to drill near-term success. In 2018, they completed their phase ll operation, drilling 24 diamond drill holes at Glencore-Bucke. They also successfully intersected mineralized zones along strike in addition to both vertically above and below previous intersections reported on the Main and Northwest Zones. As noted, one of the holes, GB18-44, intersected visible cobalt mineralization and returned grades of 0.11% Co, 9.4 ppm Ag, and 1.04% Cu over a core length of 8.40 m from 110.60 to 119.00m. Those results were included in its NI 43-101 Technical Report on the Teledyne Cobalt and Glencore Bucke Project, published in February 2021.
Those results are inspiring. And strengthened by a location adjoining the former cobalt-producing Agaunico Mine, which between 1905 and 1961, produced 4,350,000 lbs. of cobalt and 980,000 oz of silver. Notably, cobalt unearthed from the Agaunico Mine is greater than any other mine in the Cobalt Mining Camp. While production ceased in 1961 due to depressed cobalt prices and over-supply, don’t take that as a negative for FUSEF’s prospects. Remember, the green-energy initiative was just a faint blip on the radar screens during that time. Of course, things have changed.
A Massive EV Battery Metals Market Opportunity
Today, market analysts expect demand to outstrip supply by as much as 10X over the next ten years. And surging long-term demand is just one aspect making the FUSEF investment proposition attractive. FUSEF is also showing that there is depth to its operations. Their properties in Bucke and Lorrain Townships consist of 5 patented mining claims totaling 79.1 hectares (195.46 miles) and 46 unpatented mining claim cells totaling approximately 700 hectares (1729.74 miles).
Its Teledyne Cobalt project shines as well. Sitting along the west boundary of its Glencore-Bucke property, Fuse’s 100% interest in that property, also in Cobalt, Ontario, adjoins the south and west boundaries of claims that hosted the Agnico Mine. By the way, FUSEF’s properties have more than an excellent heritage; they can be efficiently explored and developed.
That’s a result of being well-managed and located to a supportive infrastructure, making projects easily accessible by highway 567 and an established secondary road already in use to support cost-effective operations. That infrastructure is getting more robust. On an inflation-adjusted basis, over $25 million ($CAD) has been spent developing its Teledyne Property infrastructure, including creating a development ramp and a modern decline going down 500 ft parallel to the main cobalt mineralized vein. That development provides an accelerated opportunity for FUSEF to capitalize on and maximize potential while mitigating financial risk. That’s not all the benefit.
The supporting infrastructure can be leveraged on-demand to provide quick access to projects and enable targeting more business quickly from a battery metals sector that is fundamentally strong despite being in the early innings of the sector lifecycle. But robust infrastructure provides another fundamental contribution- it helps materially de-risk projects. And FUSEF appears to be paying attention to that reality by actively de-risking its battery metal exploration projects by staying focused on mineral discovery project lifecycles.
That’s good practice for FUSEF and excellent news for investors.
A De-Risked Fuse Cobalt
It also mitigates the downside while developing opportunities for the exponential upside. It’s a trickle-down effect resulting from FUSEF staying focused on project “timing” and “lifecycle” indicators to maximize returns and minimize project risk. Put another way, FUSEF is doing more than working to create value; they are preserving it. Evaluations made during the concept, pre-discovery, and development phases expose big-picture opportunities and limit unnecessary financial exposure.
Investors also benefit from a team of proven leaders and advisors that intimately understand their industry, have a track record of finding accretive valuable resources, and know how to make, plan, and advance projects in world-class regions. They also get low-priced exposure to a battery metals sector expected to be a trillion-dollar industry by the decade’s end. And with some sector analysts claiming that the global battery metals supply chains must expand by 10x to meet projected critical battery metals needs by the end of this decade, that bullish assumption also keeps FUSEF in the sweet spot of opportunity.
Supporting that presumption is the International Energy Agency (IEA) on record saying that the mining industry must build at least 17 more cobalt mines by 2030 to meet global net carbon emissions goals. But that estimate was made before headlines from last month. Adding to the battery metal demand is additional forecasting that includes several states planning to eliminate sales of gas-powered vehicles entirely by 2035. More states suggest joining that move, and some even have legislation connecting them to other states’ decisions. So, there could be a snowballing of market size forming larger and faster than ever expected.
Remember, too, that cobalt is a vital fuel to the sector; without it, the EV sector is virtually powerless.
Working In Mining-Friendly Jurisdictions
Topping the list of attractions to Fuse Cobalt from an investor’s perspective is that they are ideally positioned for potentially exponential growth. That results from operating in Ontario, Canada, one of the world’s most mining-friendly jurisdictions. Working there minimizes the risk of interference from geopolitical conflict, disruptive changes to environmental regulations, and lacking a skilled and able workforce. Ontario, Canada, is ranked #12 out of 77 for “Investment Attractiveness” by Fraser Institute’s 2021 mining survey, with part of that ranking attributed to government and regulatory stability. That’s not all making the proposition attractive; capital investment is pouring into the region.
Over $50 million (CAD) in investment capital has already been committed to accelerating the development of cobalt mining projects where FUSEF operates. That includes $5 million from the Canadian Federal government, $5 million from Ontario’s provincial government, and a loan commitment of $45 million from mining and commodities trading giant Glencore Plc ($GLNCY) to refurbish and reopen the regions only refinery.
Those efforts enhance project visibility and allow FUSEF to expedite exploration and development by leveraging that fortified infrastructure from its projects close to essential roads, power, equipment, and field service companies.
Sum Of Its Parts Equals A Bullish Proposition
Thus, while single items make the FUSEF proposition attraction, it’s the sum of its parts making it compelling. And as the company continues to do its groundwork, those parts get even more potent, supporting further the case for significantly higher valuations. Today, at roughly $0.07, there appears to be a considerable disconnect between assets and share price. And considering that FUSEF has enough capital to complete its exploration projects through the end of 2022, and with several updates likely in the queue, taking advantage of the disconnect may also be a timely consideration.
Don’t forget, either, that FUSEF is also uniquely positioned to ride the tailwind created by major players like Glencore Plc, whose massive regional investments are revitalizing the country’s only cobalt refinery. Here’s another thing to note. FUSEF doesn’t necessarily need to unearth cobalt and other minerals or metals to deliver potentially exponential value to investors. Proven assets underground are also valued; just check the valuations of junior miners in the precious metals sector. Some score valuations up to hundreds of millions of dollars before taking an ounce of metal from the ground. FUSEF could join that club.
After all, Fuse Cobalt, Inc. is in the right market at the right time. And trading at roughly $0.07, investors are getting exposure to a company with activity on the ground, a significant number of exploratory holes drilled, and geological surveys and project updates expected that could drive valuations substantially higher. FUSEF can support a significantly higher stock price on an intrinsic basis alone.
However, investors may be wise to look past just the intrinsic. On an inherent basis, FUSEF share prices ignore the near-term potential of several projects. And with results from any of its projects each being a potential catalyst, that totality makes the pricing disconnect more than an attractive proposition; it makes it hard to ignore.
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