LONDON (Reuters) – Junior explorer Sula Iron and Gold plans to change its name to African Battery Metals, reflecting a shift in focus after it bought a controlling stake in a cobalt license in Democratic Republic of Congo (DRC).
The deal, which needs to be approved by shareholders later this month, would make Sula Iron and Gold the first AIM-listed company to run the risk of developing cobalt in DRC, its CEO said.
DRC is plagued by conflict, political tumult and issues of child labor, but is also home to around two-thirds of the world’s cobalt supplies.
CEO Roger Murphy said in a telephone interview his company had a competitive advantage through its links with Madini Minerals, a private company with experience of working in DRC. Its partners include Murphy and another Sula board member.
So far, DRC production has been dominated by Glencore and China Molybdenum.
Canada’s First Cobalt Corp said in September it had decided to focus its efforts on Canadian cobalt, abandoning seven cobalt exploration properties in DRC it had considered.
Analysts say more companies might have to consider DRC as demand for phone and electric vehicle batteries drives demand. Cobalt prices have more than doubled this year.
Broker SP Angel said in a note the license acquisition “provides the London market with a new exploration exposure to the growing interest in cobalt as a battery metal”.
Until now Sula Iron and Gold was focused on iron ore and gold in Sierra Leone. Murphy said the aim was to continue to develop those assets but through a subsidiary named Blue Horizon and the company may seek a joint venture partner.
In DRC, African Battery Metals will explore a license area of 55 square kilometers near existing cobalt and copper mines.
Murphy said the company was paying $100,000 in two tranches for the licensed area, which is sold by DRC lawyer and businessman Jean-Pierre Mwamby, who retains a 30 percent stake.
The company has also raised 1.75 million pounds ($2.34 million) before expenses through a share placement.
($1 = 0.7473 pounds)
(Reporting by Barbara Lewis; additional reporting by Nicole Mordant in Vancouver; Editing by Adrian Croft)