Conico (CNJ) - Finding Nickel, Cobalt & Scandium

Conico Ltd. is an Australian junior exploration and development company. The asset portfolio of the company consists of the Ryberg and Mestersvig projects in Greenland and its Mount Thirsty project in Australia. The Mestersvig project of the company is located on the east coast of Greenland and holds a land position of 1,447 km². The Mount Thirsty project of the company is located 16 km northwest of Norseman in Western Australia and is a 50/50 joint venture between the company and Greenstone Resources LP.

The company in mid-January 2023 announced drill results and rock chip assays from its 2022 field season at its Mestersvig project. The assay results showed up to 2.7% lead and 2.2% zinc over 1.05 m at the Blyklippen prospect and up to 23.8% zinc over 4.5 m at its Sortebjerg prospect, as well as high-grade rock chip samples. Conico Ltd. believes that the drill results show the accuracy of its targeting but do not show economic grades. The company may look at various avenues in the future to advance the project including joint ventures.

Conico Ltd. on the 23^rd of January 2023 announced assay results from its exploration drilling initiatives at its Mount Thirsty project. The assay results show highlights of up to 49.8 g/t of scandium and 0.28% nickel underlying the potential for a future scandium resource. Scandium is a critical mineral, essential for hydrogen fuel cells and is forecast to grow by approximately 9% per annum over the next seven years. The company plans to conduct a scoping study of the Mount Thirsty project in 2023 from where it will move into a pre-feasibility study based on a high-pressure acid leach operation.

Projects

The asset portfolio of Conico Ltd. contains the Mestersvig project in Greenland and the Mount Thirsty project in Western Australia.

The Mestersvig project in Greenland is a 100%-owned land package hosting primarily lead and zinc mineralisation. The project includes the past-producing Blyklippen Mine which produced 545,000 tons of ore at 9.3% lead and 9.9% zinc between 1956 and 1962. The project is located on the east coast of Greenland, 5 km from the Mestersvig military base. Multiple mineralised occurrences and 13 km of untested strike length extend from the Blyklippen Mine. The mineralisation of the project includes fault-controlled epithermal lead-zinc veins with accessory silver and copper hosted within quartz veins. The project area is bordered by the Palaeogene Werner Bjerge alkaline complex to the south and a major regional fault to the west, beyond which sits the Caledonian fold belt.

The Mount Thirsty project is a 50/50 joint venture between Conico Ltd and Greenstone Resources LP. The project holds the potential to be one of Australia's most advanced cobalt projects with the potential for nickel sulphides and platinum group elements (PGEs). The project is located 16 km northwest of Norseman, Western Australia, and is close to all necessary infrastructure required for its advancement and eventual operation. The mineralisation of the project features a highly weathered ultramafic peridotite rock hosting a cobalt deposit enriched with nickel and manganese, as well as the Mount Thirsty Sill Complex, a prospective ultra-mafic layered intrusion with potential for nickel, copper and PGEs. The region is a low-capital cost, high-quality cobalt project in the stable mining jurisdiction of Western Australia.

Mestersvig project exploration

The company in mid-January 2023 announced drill results and rock chip assays from its 2022 field season at its Mestersvig project. The assay results showed up to 2.7% lead and 2.2% zinc over 1.05 m at the Blyklippen prospect and up to 23.8% zinc over 4.5 m at its Sortebjerg prospect, as well as high-grade rock chip samples. Conico Ltd. believes that the drill results show the accuracy of its targeting but do not show mineralisation grades which will be economic to further pursue. Guy Le Page, Director of Conico Ltd. explains that the exploration results of the Mestersvig project will be assessed and a revised way forward will be generated based on the findings.

“With respect to Mestersvig, which is the zinc and lead target, we got some interesting hits. We didn't get the sort of widths and grades that were looking for that the old Blyklippen mine had, but there was plenty of encouragement there. We're probably going to review it and make a decision down the track. We could look at joint ventures. We could securitize it. We could go back in ourselves at some point, but overall, they probably weren't the results we were hoping for but it's still alive.”

The company may look at various avenues in the future to advance the project including joint ventures, which will be able to provide additional funds to advance the project.

“I don't think it has any value in the market at the moment. It might have some future value if we roll it out and try to move it ahead. It has some value but in terms of market value, it's very limited.”

Scandium market

Scandium is a rare earth element (REE) that is gaining increasing attention due to its unique properties and potential applications. The metal has the ability to enhance the performance of a variety of materials, such as aluminium, where it can increase the strength and durability of the material without adding significant weight. The increase in strength with little weight addition has made aluminium-scandium alloys attractive in the aerospace industry, where lightweight and strong materials are essential. Scandium is also used in high-intensity lamps for sports stadiums and movie theatres, as well as in medical equipment and fuel cells.

The global scandium market is relatively small, with a size of approximately 500 million tons per year, according to Le Page. Australia is the world's largest producer of scandium, followed by China, Russia, and Kazakhstan. The scandium market is still in its infancy but is expected to grow in the coming years, at approximately 9% per annum, as more industries discover its unique properties and potential applications. The main challenge facing the industry is the relatively high cost of producing and extracting scandium, which limits its use in some applications. Le Page explains the global scandium market as a less well-known industry, but with high value-creation potential.

“Scandium is not particularly well known. The world market is only 500 million tons. It's forecast to grow at just under 9% per annum for the next 7 years. It's used in electronics and defence. It's an alloy, it's a rare earth. It's not widely known. There's not a lot of production out of Australia, it is very limited.”

Mount Thirsty project exploration

Conico Ltd. on the 23^rd of January 2023 announced assay results from its exploration drilling initiatives at its Mount Thirsty project. The assay results show highlights of up to 49.8 g/t of scandium and 0.28% nickel underlying the potential for a future scandium resource.

The company plans to conduct a scoping study of the Mount Thirsty project in 2023 from where it will move into a pre-feasibility study based on a high-pressure acid leach (HPAL) operation.

“I think the first part of it has really got to be a scoping study to demonstrate to the market that even at a high level, this could work. The next phase would be to push ahead with a pre-feasibility study. Later this year we will roll into a pre-feasibility study, and that's not going to be super expensive.”

Le Page believes that the ideal advancement route of the project is to advance the Mount Thirsty project through the creation of an updated pre-feasibility study (PFS) to the point that the project will be spun out into a newly formed company.

“We've got a JORC resolve of 30 million tons. We've done a PFS already on the atmospheric leach. A lot of that work can be replicated or used again in a PFS for HPAL. It is not going to be super expensive to do a PFS. If we can do that, Greenstone Resources is interested in a spin-out, if we complete a PFS, I think we then have a study that we can get a partner in. That would probably be in the middle of next year, hopefully, when we could look at finishing a PFS with an HPAL circuit.”

 The spin-out will through its initial public offering (IPO) be aimed at raising enough funds to advance the project nearer to production. Le Page explains that the end goal is to retain 30% to 40% interest in the project after its IPO.

“The sort of model you are looking at bringing a partner into is that you're looking to retain somewhere between 30%-50% of the project into a production scenario as production. If you look at a lot of the deals that have been done around Western Australia, for a USD$ 1 billion-plus CapEx, that's realistic. You might be more around the 30% to 40% mark.”

Company finances and Future initiatives

Conico Ltd. has a cash position of approximately AUD$ 500,000 and will look to raise funds in the coming year to advance its project portfolio. Le Page explains that the company will in all likelihood look towards its current shareholders to raise funds, with the possibility of including new institutional investors in the company. He believes that the company does not require a large amount of raised capital to reach its 2023 milestones, with Conico Ltd. looking to advance its Mount Thirsty project to the point that it will be spun out into a separate company.

“We'll probably go back to shareholders. That's the most likely scenario. We have a little shareholder group, we might try and bring some other parties in. We're not looking at a big budget this year because we're only out for half the costs, but the objective would be to work the project up, do some more studies and do some more studies on HPAL, and then look at the spin-outs in the third and fourth quarters of this year.”

Le Page explains that the company aims to be able to provide a way forward for its Mestersvig project in Greenland by the end of 2023. The company may look at creating a joint venture with another entity to be able to advance the project, but may also look to sell the asset, should it not have a place in the company’s future initiatives.

“At the end of the day, come the end of the year, we will be either looking to do something on Greenland, whether that's a JV or sell it and look for another project.”

Conico Ltd. may look to enter the lithium space, should it find itself in the market for a new project at the end of 2023. Le Page believes that there are various avenues and industries the company may enter should it decide to, which will be able to provide the company with value-creation potential.

“I prefer the LME precious metals. I think once you enter the tungsten, I found that sort of market hard. Vanadium, silica sands, etc. Although lithium is looking at becoming quoted on the LME, so that's probably been elevated. There are lots of opportunities out there, we'll just have to assess it, but it's like all these things, you want something on the right end of the grade-tonnage curve to make it work.”

To find out more, go to the Conico website