US Cobalt Inc. (USCO.V) was introduced to us by Energy and Gold Ltd. They've written multiple articles on the company which was previously called Scientific Metals (STM.V), if you want to read all of the articles you can do so here.
USCO.V is focused on cobalt mining which is experiencing a surge in demand based on the need for ethical and reliable supply chain. The company's core project is Iron Creek located in Lemhi County, Idaho, USA. The company is in the midst of confirming historic tonnage and grade estimates which contains 1,279,000 tons grading 0.59% cobalt – which has yet to receive NI 43-101 compliant status.
In a mere 6 months, USCO.V went from $0.45 cents to $1.18. From a trading perspective, we have been observing the stock lately and there has been a strong selling cycle since the 52 week high but we believe that it is related to the closing of the gaps from the last rally. Moreover, the developments reported were not in alignment with the downward movement of USCO.V's price and its activities at Iron Creek project.
April 26 - The company provided an update on the Iron Creek Cobalt Project. They reported that the surface and underground drilling campaigns were in the final stages of planning, and they plan on undertaking mapping and sampling program. They also provided an update on the rehabilitation of the portals to three underground tunnels. The first portal (Adit #1) is complete - access has been gained to the entire length of tunnels. While more rehabilitation is needed before underground sampling, mapping and drilling were reported to be planned.
May 17 - Announced a private placement at $0.85 for $1.7M with warrant at $1.10 per share.
May 18 - Closed Private Placement of May 17 which will be used for working capital and the exploration at Iron Creek Cobalt project.
May 24 - Changed name to USCO - US Cobalt (USCO.V) from Scientific Metals (STM.V)
May 25 - Insiders purchased (CEO Wayne Tinsdale) at $0 .84 cents ($970K) and $1,10 ($485K) for a total of $1,3M dollars
May 30 - Signed a contract for exploration drilling services with Timberline Drilling for 30,000 Feet drill campaign. Otherwise, Adit 1 is complete. The company reported that they would repeat similar work on other adits. The project has a total of 1,500 feet of tunnels. USCO.V also reported that it plans to conduct geophysical surveys over the known mineralized zones for 2017 to identify a method that will assist in locating additional drill targets. Extensive surface sampling in sediment, soil, and outcrop were also planned, along with staking programs.
June 11 - Mobilized Drilling Rigs at the Iron Creek Cobalt; Two drilling rigs and mapping and sampling crews. A total of approximately 30,000 feet of drilling is planned for 2017.
July 18 - Provided progress update at the Iron Creek Cobalt Project. Channel sampling program from within the underground adit at the Iron Creek cobalt project, was near completion. The samples to be shipped to a nearby lab for assay and testing on a rush basis. Two drills operating on site and two additional drills requested, subject to availability, to be delivered in order to accelerate the summer drill campaign.
July 31 - Reported intersects of up to 1.02% cobalt mineralization in 10 foot channel sample. Also provided update on the project stating that the core drilling program had commenced with three holes completed, the rehabilitation of Adit Number One was complete, and surface work directed at the rehabilitation of the second adit has commenced. A total of 133 channel samples (each five feet in length) have been collected.
August 2 - Options granted 950K at $0.57 cents to employees, and consultants.
Despite all the above news, the stock has been trending down since the 52 week high. In early August the stock broke S1 and has regained value last week. In addition, the pivot value was broken on an ascending trend.
Given the fact USCO.V has been drilling and that insiders purchased at at $0,85 cents and were recently granted options at $0.57 cents, we consider possible entry point at this level to be very attractive. Note that USCO.V is currently working towards an a NI 43-101 compliant status and as such is an additional risk to consider. However, the company has moved very fast this year at Iron Creek, and the outcome can be very rewarding.
We also ran an Augmented Dickey Fuller test on the closing price. The results suggest that USCO.V is not mean reverting. The results are yet to be statistically significant but an imminent break out might be underway. Time will tell.
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