September 10, 2026
Cobalt projects tend to arrive with a story attached: a promising drill intersection, a battery-demand forecast, a slide with an upward-sloping line. None of that tells you whether the asset can be permitted, financed, built and run at a profit. Evaluating a cobalt venture is largely an exercise in quiet scepticism. Read the technical reports properly, work out who actually controls the ground, and ask what has to go right for the numbers to hold. The steps below are the ones worth completing before any money moves.
Start with the geology, not the narrative
Most cobalt is not mined for its own sake. It comes out of the ground as a by-product of copper or nickel, or from the sediment-hosted deposits of Central Africa, and that shapes everything downstream. If cobalt is a credit against a copper or nickel operation, the project can survive a weak cobalt price. If cobalt is the operation, you are taking a concentrated bet on a single market.
Then interrogate the resource estimate. Which reporting code was it prepared under — JORC, NI 43-101, SAMREC? Who signed it, and when? What proportion sits in the measured and indicated categories rather than inferred? Inferred material is a hint, not a reserve, and it should not carry the same weight in your thinking.
- What is the primary metal, and what share of revenue comes from cobalt?
- Which code governs the estimate, and how old is it?
- How much of the resource is measured and indicated?
- Is the mineralisation continuous enough to mine at the planned scale?
Mineralogy and metallurgy decide the outcome
Two deposits with identical grades can end up in very different places. Cobalt hosted in sulphides behaves nothing like cobalt in oxides or arsenides, and troublesome elements such as arsenic, magnesium and talc can force a flowsheet to be redesigned long after a feasibility study has been published.
Ask for the test work: locked-cycle results, pilot plant runs, recovery assumptions, reagent consumption and the grind size assumed. Recoveries borrowed from a neighbouring project are marketing until they are demonstrated on your ore. If the plan is to produce battery-grade material rather than a concentrate, check that the refining step, its capital cost and its buyers are genuinely in place. That is a different business with stricter specifications.
Permits, licences and control of the ground
This is where promising projects quietly die. Establish whether the company holds an exploration licence or a full mining licence, when it expires and on what terms it can be renewed. Look for surface rights, land access agreements, community commitments, royalties, state free-carried interests and any restriction on exporting concentrate.
Mining law changes. Where a government has recently revised its code, raised royalties or signalled a review of existing titles, treat the current licence as a starting point rather than a guarantee. Supply-chain scrutiny is the companion issue: buyers and refiners increasingly expect documented due diligence on where material comes from, including any overlap with artisanal workings.
The financials: capital, costs and credits
Capital intensity
Compare the headline capital figure with the scope of the project. Does it include the process plant, tailings storage, power connection, mobile fleet and owner's costs? Is there a contingency, and does the number look plausible against similar operations? Sustaining capital and eventual closure costs get left out more often than they should.
Operating costs and by-product credits
Check the split between mining, processing and general costs, and how much of the revenue line depends on credits from copper, nickel or gold. Credits can carry a project — or flatter it, if the price assumptions behind them are generous.
Price, discount rate and sensitivity
Ask what cobalt price the study used and where the figure came from. Then run your own version. At what price does the net present value fall to zero? Which variables — head grade, recovery, strip ratio, exchange rate — move the result most? A study that shows only one happy case has not been tested.
Infrastructure and the practical realities
Processing cobalt is energy-hungry, so reliable grid power, or a credible plan to generate it, matters as much as the resource. So does water. Then there is haulage: distance to port, road condition, border crossings and cost per tonne moved. Add accommodation, a workforce drawn from the local area, and a tailings storage facility that can actually be permitted and built. Tailings is a technical, environmental and social risk in equal measure, and it has stopped projects before.
People, partners and the paper trail
A strong resource with a weak team is a slow way to lose money. Has management built and operated mines before, and in that jurisdiction? Read the filings for directors' other appointments, suspended stocks, unresolved disputes or restatements. Understand the joint venture: who funds what, who operates, and what happens if a partner fails to contribute.
Offtake agreements deserve the same treatment. Is it binding or conditional? Who is the counterparty, and can they take the product? Prepayments bring cash forward but can lock in volumes and pricing that hurt later if the market improves.
If a project only works when you accept every assumption at face value, it does not work.
Before you commit: a short checklist
- Read the latest technical report in full, including the qualifications and the fine print.
- Confirm the licence type, expiry, renewal conditions and any state participation.
- Trace the metallurgy from test work through to the flowsheet you are being shown.
- Rebuild the cash flow with your own price, discount rate and contingency.
- Check the funding plan: how much is committed, and how much is still a hope?
- Verify the team's track record and the obligations of every partner and offtaker.
Work through those steps and you will usually reach a clear yes, a clear no, or a short list of questions the company cannot answer. The last of those is often the most useful outcome. Cobalt sits in a volatile market, and the projects that prosper tend to be the ones whose owners understood the geology, the permits and the cost base long before the price moved. For anything material, take independent legal, financial and technical advice before you invest.
