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Geovic Mining

(GMC : TSX : $0.81), Net Change: 0.04, % Change: 5.19%, Volume: 375,628

www.geovic.net

Next up...cobalt? While this rare earth metal has not yet triggered a massive rally nor inspired the same kind of media attention that lithium has, it has begun to garner some attention. According to a recent article, cobalt has became one of the two "major"minor metals in this decade's metals cycle, the other being molybdenum. Similar to lithium, cobalt's largest market is in the rechargeable batteries that are used in billions of electronic devices from cell phones to laptops to hybrid automobiles.

Cobalt is also used in super alloys, catalysts, metallurgical (hard metals), pigments, soaps, adhesives, and magnets. Also similar to copper and nickel, the cobalt price has spiked in the last couple months, rising from lows of US$11 per pound to US$21 per pound, and according to one newsletter writer, a major Chinese supplier is now selling at US$23 per pound. Moreover, the supply/demand economics look fairly attractive as supply is typically constrained as roughly 95% of world cobalt production is a byproduct of nickel and copper mines, with the politically unstable Democratic Republic of Congo (DRC) containing half the world's cobalt supply and representing a significant share of anticipated future cobalt supply. So will the lithium craze spread to cobalt? And if so how can investors leverage themselves to this play? Well, there are currently limited ways to play cobalt, at least until the London Metals Exchange begins trading contracts in February 2010.

Geovic is one of the few Canadian stocks we could find with leverage to this metal (note U.S.-based OM Group (OMG) and Freeport (FCX) both produce cobalt). The huge scale of Geovic's asset provides a great deal of leverage to the cobalt price. It is developing the largest primary cobalt deposit in the world in the African country of Cameroon. Geovic has risen steadily month-to-date, up 40%, with fairly low volatility. However, this move pales in comparison to the Canadian lithium plays, many of which have exceeded 100% gains month-to date.

With cobalt prices moving higher and new LME cobalt contracts bringing greater transparently and likely increased price stability (encouraging development of new cobalt uses?) is it time for cobalt to be part of your rare element holdings?

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