Boreal Metals (TSX-V: BMX / Frankfurt: 03E) is a base & precious metals explorer in Scandinavia that is making a major push into the key green energy tech metal Cobalt (“Co“).  The management team & Board have a remarkable amount of experience for a company with a market cap of $17 M plus ~$3 M in cash. [~52 M shares outstanding]

In addition to 4 projects with exploration potential in Zinc (“Zn“), Copper (“Cu“), Silver (“Ag“) & Gold (“Au“); 2 in Sweden & 2 in Norway (Boreal controls 38,266 hectares), on January 16th management announced the execution of a definitive agreement with EMX Royalty Corp. for the acquisition of the 13,115 hectare Modum Cobalt project.  

The Modum project surrounds southern Norway’s historic Skuterud Mine (also known as the Modum Mine).  Historic mine workings, prospects and trends of mineralization extend onto the property Boreal intends to acquire.  Skuterud was Europe’s largest and highest grade producer of cobalt though the nineteenth century.  CEO Karl Antonius commented, 

“The Modum Project includes an impressive 12,000 hectares, that’s 12 kilometers of cobalt prospective geology, with stand-alone mining potential.  We are excited about this timely acquisition of a high-grade cobalt project within an emerging battery production sector in the Nordic Region.”  

Cobalt in Norway??

I was surprised to learn that Scandinavia is home to major cobalt operations. Umicore produces, refines and markets cobalt in Belgium.  The world’s largest cobalt refinery (Kokkola) is in Finland.  Glencore has a giant nickel refinery in Norway (Nikkelverk) that produced about 5,000 tonnes of refined cobalt in 2016.

I have to admit that at first blush, I wondered if this move into Co was the Company simply jumping on the bandwagon of a red hot sector.  However, upon speaking with Mr. Antonius and Director Eric Jensen about the project and Norway’s history as a global Co supplier, I came away excited by the prospects.  Norway, led by projects in the same district Modum is in, was a global leader in Co production for much of the 1800’s.  

Over 80% of the world’s cobalt reportedly came from Norway’s Skuterud Mine district in the 1820s-30s.  Boreal Metals’ strong in-country experience in Norway & Sweden makes it a natural fit to take this project and run with it.  I should also mention that management is actively seeking additional Co properties in the region.

The historic grade of Co mined in the district was ~0.20%, equal to roughly US$156/tonne at the spot Co price of US$78k/tonne.  A key risk factor is that this project depends on strong Co pricing for years to come.  Importantly, Au is known to accompany the Co mineralization in the area, but the grades of a potential Au by-product was never determined. 

Miners in the 1800s would not have been interested in exploiting what they would have considered to be an insignificant Au value at the time.  With Au now at US$1,340/oz., up US$100/oz. in just the past month — a gold production credit could add significant value. 

In the price chart above, readers can see that the Co price is up nearly 250% from January 2016.  It’s at a high not seen since the 2008 price spike when the metal rose above US$110k/tonne.  The outlook for both cobalt & lithium prices is quite robust.  

Analysts correctly point out that the cost of both metals as a percentage of the total cost of a lithium-ion battery is low.  Therefore, even though the cobalt price is up ~260%, and lithium prices are up by a similar amount over the past few years, overall battery costs continue to decline due to technology improvements and economies of scale.   

Much has been written about conflict cobalt, the greater than 50% of global Co that comes from the Democratic Republic of Congo (DRC).  Ongoing child labor law abuses have cast doubt on the country’s continued role as (by far) the largest producer of the metal.  

There are a number of promising developments for Co production in Canada, but for the foreseeable future the DRC will dominate.  Needless to say, every major user of Co on the planet is looking to source its needs outside of this troubled country.  

By contrast to the DRC, Sweden & Norway rank # 4 & 6, respectively, out of 176 countries / territories on Transparency International’s annual Corruption Perceptions Index.  Both countries are also highly ranked in the Fraser Institute Mining Survey; in the top quartile, with Sweden # 8 of 104 countries / territories.  

In my view, this is a primary reason to own Boreal Metals in the first place, a truly world-class mining jurisdiction.  

Zinc Price Has Made a Major Move Also….

As strong as the market is for cobalt, readers should also note the strength in zinc prices, up ~140% in the past 13 months, and at a high not seen since August 2007.  Zinc inventory levels (a key pricing indicator) at the LME are at nearly a 10-yr. low, down over 80% since January 2013.  Global Zn supply is dominated by China, which supplies more than the next 5 largest zinc producing countries combined.  Additional zinc supply from Nordic countries would be well received.    

One of Boreal’s flagship projects is Gumsberg (18,300 hectares) in southern Sweden.  Gumsberg is surrounded by past producers and developers of zinc, copper, lead, silver & gold.  Gumsberg was mined from the 13th century through the early 1900’s.  It hosts over 30 historic mines, most notably the Östrasilverberg mine, which was the largest silver mine in Europe between 1300 and 1590.  Despite its long-lived production history, relatively little modern exploration has taken place on the project. 

Compare these 2016 drill results at Gumsberg to the reported Zn grades at nearby past producers, this is a highly promising, near-surface, early-stage project.  The Company is conducting a follow up drill program with results expected in March. 

In northern Norway Boreal has the 100%-owned Burfjord Copper-Gold project.  CEO Antonius recently commented, 

“The IP Geophysical Survey increases our confidence in the strike and depth continuity of copper mineralization at Burfjord.  Copper mineralization at Burfjord consists of high-grade copper veins within a broader mineralized envelope and the results of this survey affirm Boreal’s target size criteria.”

Mineralization occurs as both high-grade Cu-Au bodies that were historically mined at high cutoff grades (>3% Cu), but management has recognized significant volumes of bulk tonnage potential Cu-Au mineralization developed in stockwork vein arrays throughout the property.  Limited historical drilling includes a 7-meter intercept of 3.6% Cu.  


Boreal Metals (TSX-V: BMX / Frankfurt: 03E) now has 5 high-quality projects, 3 in Norway and 2 in Sweden.  I touched briefly on 2 projects, but I will have more to say about all of the Company’s projects next month.  Chairman & Director Patricio Varas, P. GEO has over 30 years’ experience at a wide range of operating mines and exploration projects.  He’s worked on world-class deposits and founded Western Potash Corp.  {See bio above}  

Varas & CEO Antonius are joined by a number well-seasoned mining and funding professionals, {see bios on website}including Director Eric Jensen – Chief Geo & GM of Exploration for EMX Royalty Corp. and Daniel Maceneilm MSC, P. GEO.

Combined, management, the Board & Technical Advisory team have extensive experience in geoscience, mine engineering, geology, exploration (including important discoveries), project development, feasibility studies, corporate management, venture capital, private equity and capital raising (project funding).  All of this talent wrapped up in a $17 M market cap company with ~ $3 M in cash.  Five projects spanning zinc, copper, silver, gold and now cobalt – in a world-class mining jurisdiction, with more cobalt property acquisitions being considered.  

Disclosures:  The content of this article is for illustrative and informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Shares of Boreal Metals are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares in Boreal Metals and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein is biased in his views on the Company.  Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

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