Why Northern Cobalt Ltd Jumped Higher Today

At the time of writing, shares of Northern Cobalt Ltd [ASX:N27] are up by 26.67%, to 19 cents, in today’s trading. Northern Cobalt is located in the far north-eastern corner of the Northern Territory. It’s located 180 kilometres (km) to the south-east of the population centre of Borroloola.

Why did Northern Cobalt Ltd shares do this?

The company announced that it received $1.375 million in the Federal Government’s Junior Minerals Exploration Incentive (JMEI) scheme. JMEI credits will be distributed to shareholders as tax credits for the 2018/19 tax year.

What now for Northern Cobalt Ltd?

Northern Cobalt was cashed up at 31 March, with roughly $4.6 million in the bank. Assuming the company spent $1.75 million last quarter, as it estimated it would, it should hold about $2.85 million today. We should know the confirmed number later this month, when the company announces its quarterly cash report. In other words, the company could be sitting at an implied enterprise valuation (market cap less estimated cash plus debt) of roughly $5.2 million at 19 cents per share.

That seems expensive for a tiny cobalt play.

But the company just finished an extensive air-core drilling program and helicopter aeromagnetic survey. The goal is to find the best locations to drill next. Results are imminent. Once the company analyses the results and works out the best locations to drill, it will start a deeper drilling program to (hopefully) find the cobalt mother lode.

It’s still early days for shareholders. But exploration is a slow process. So, it’s understandable. If the company can unlock the geological puzzle in the months ahead, shareholders could be rewarded in the next few months.

Jason Stevenson,
Resources Analyst, Markets & Money

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Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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