Global Cobalt (V.GCO) CEO sees no reason to panic as Russia takes control in Crimea

Stockhouse Editorial
1 Comment| March 24, 2014

Global Cobalt Corp. (TSX: V.GCO, Stock Forum) Chief Executive Officer Erin Chutter says she does not believe the company will lose title to its flagship cobalt project following the Russian annexation of Crimea and the resulting sanctions imposed on Russia by Canada and the United States.

Speaking to Business News Network on Friday, Chutter was asked if she is worried about possible seizure of Global Cobalt’s right to earn a 100% stake at the Karakul cobalt project in the Republic of Altai, southern Siberia.

But Chutter said “no.”

“At the project we are earning into, the title is held by a Russian entity. We are about 18 months away from fully vesting title,’’ she said.

“I would expect that by that point in time, the issue will be resolved in some shape or form.’’

The Global Cobalt CEO and Chair of the Vancouver chapter of the Canada Eurasia Business Association was being interviewed just days after Crimea voted to join Russia in what was deemed an illegal referendum by Western leaders, including Canada Prime Minister Stephen Harper.

Government sanctions have been imposed against key Russian leaders and a handful of wealthy individuals tied to Russian President Vladimir Putin and Russia’s Rossyia Bank.

In retaliation, Russia has placed certain restrictions on a handful of American lawmakers.

So far, no broad sanctions have been levied against Russia.

But David Ross, a former advisor to the Russian government, told BNN that this could change if Putin’s Russia continues to bully its way into the Ukraine and grab more territory. U.S. President Barack Obama has not ruled out the possibility of additional sanctions.

“Putin is playing the West,’’ said Ross. “He is not worried about trade relationships.”

Still, during the BNN interview, Chutter said observers should take a step back and recognize the very surgical nature of the sanctions that are being imposed. “It is being done with an abundance of caution on the part of the West and the government of Russia,’’ she said.

“This is a not a time to panic or lose heads,’’ she said.

Global Cobalt says its Karakul project has the potential to be among the world’s largest deposits of cobalt, a key ingredient used in hybrid electric vehicle batteries (HEV), aerospace technology, hardened steel, smartphones, and solar panels.

But Chutter said there are Canadian companies with much greater exposure to Russia, including Kinross Gold Corp. (TSX: T.K, Stock Forum), which has very large mining operations in eastern Russia, including the Kupol and Dvoinoye gold mines.

Ross said companies with assets in Russia need to be mindful that Russia is a high risk, high reward place to do business. “You have always had to worry about Russia. Now you have to worry a bit more.’’

But jurisdictional risk is something that the mining industry came to terms with many years ago, Chutter said.

“Unfortunately Mother Nature doesn’t put deposits near downtown Toronto and Vancouver.’’

Meanwhile, as reported by Stockhouse, Russia’s Ambassador to Canada has expressed his support for Global Cobalt in a written statement.

The Vancouver junior has secured funding support from the European Bank of Reconstruction and Development, an international financial institution that supports projects in Central and Eastern European countries and is now a Global Cobalt shareholder.

Global also has a strategic partnership with Beijing General Research Institute of Mining & Metallurgy (BGRIMM), a global mining consultancy. Under the terms of an October, 2013, memorandum of understanding, BGRIMM will arrange financing and selection of a Chinese contractor to develop a bankable feasibility study for the project.

Subject to the approval of Global Cobalt, Beijing Easpring Material Technology Co. Ltd. will arrange offtake agreements with a major Chinese processor. Easpring is a leading battery materials supplier and is publicly listed in China.

Global Cobalt shares closed at 10.5 cents on Friday, leaving a market cap of $8.8 million, based on 83.6 million shares outstanding. The 52-week range is 26.5 cents and 3.5 cents.

DISCLOSURE: Global Cobalt is a Stockhouse client.


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March 24, 2014
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