Cobra Resources (LSE:COBR) – Maiden Resource Work Begins With 2026 Drill Campaign

Key Concepts

• Critical Minerals: Rare earth elements (REEs), copper.
• In Situ Recovery (ISR): A mining method where ore is dissolved and extracted through wells, minimizing surface disturbance.
• Heavy Rare Earths (HREEs): REEs like dysprosium and terbium, crucial for magnets.
• Light Rare Earths (LREEs): REEs like cerium, more abundant and generally lower value.
• Paleo Channel: An ancient riverbed or channel, often a geological setting for mineralization.
• Sonic Core Drilling: A drilling technique for unconsolidated sediments, allowing for detailed geological and hydrological analysis.
• Permeability: The ability of a rock or sediment to allow fluids to pass through it.
• Transmissivity: The rate at which water can be transmitted through a unit width of aquifer under a unit hydraulic gradient.
• Geometallurgy: The study of how geological characteristics influence the metallurgical recovery of minerals.
• Flowsheet Optimization: Improving the efficiency and cost-effectiveness of the mineral processing steps.
• Rehabilitation: Restoring land to its previous state, such as farmland, after mining.

Cobra Resources: Advancing Critical Minerals Projects

This summary details the operations and strategies of Cobra Resources, a London-listed company focused on critical minerals in South Australia. The company is advancing two key assets: a heavy rare earth in situ recovery (ISR) project and an early-stage copper project.

Heavy Rare Earth ISR Project: Bolan

The Bolan project targets heavy rare earth elements (HREEs), specifically dysprosium and terbium, which are vital for magnet production.

1. Geological Setting and Hydrology:

• Unique Ore Body: Unlike traditional clay-hosted or saprolite REE deposits, Bolan's mineralization is found in a paleo channel, similar to uranium mineralization. This geological setting bypasses many operational challenges associated with clays.
• Permeable Sand Aquifer: The mineralization is hosted within a permeable sand aquifer, characterized by a "flooding facies" of a marine depositional paleo channel.
• Hydrology Study Results: A recent field study on an installed wellfield demonstrated excellent connectivity, hydrological energy, and productivity through permeability, indicating potential for a highly productive ISR operation.
• Lateral Extent and Uniformity: The paleo channel system is laterally extensive and expected to be more uniform than meandering river systems. Hydrological studies show uniform drawdowns and responses in the aquifer, reflecting consistent geology.
• Confined Aquifer: The aquifer is shallow (around 30 meters deep) and well-confined by an impermeable layer above, which limits injection pressure but ensures containment.

2. Scale and Resource Definition:

• Demonstrating Scale: Cobra Resources has strategically acquired a significant landholding of over 3,300 square kilometers to demonstrate the project's scale.
• Systematic Exploration: The strategy involves mapping the geology, utilizing historic data to identify high-grade zones, and then conducting step-out drilling at scale from these points.
• Targeted Drilling: The drilling program aims to define mineralization within confined, permeable horizons across significant areas.
• Footprint for Longevity: The company is targeting footprints of three to six square kilometers to support multigenerational operations.

3. ISR Wellfield Design and Permeability:

• Drilling Methodology: Conventional air core drilling is not suitable. Cobra Resources will employ sonic core drilling for unconsolidated sediments to understand geology and permeability at scale.
• Step-out and Infill Drilling: Initial drilling will focus on step-outs for scale (kilometer spacing), followed by infill drilling using more cost-effective methods like rotary mud or air core as confidence grows.
• Downhole Geophysics: Techniques like conductivity and resistivity will be used to map horizons and understand geological parameters crucial for ISR and grade bearing.
• Predictability for ISR: Key tenets for ISR well design include vertical variability and predictability. The data gathered will inform these aspects.
• Connectivity and Spacing: Tracer dye tests have shown excellent inter-well connectivity. With a 7-meter spacing in tests, over 60% of the tracer was recovered in four days. This suggests that wellfield spacings of 20 to 30 meters are achievable, which is considered good in the uranium ISR context.

4. Rare Earth Composition and Flowsheet Optimization:

• Magnet Rare Earths: The project contains a good endowment of magnet rare earths and heavy rare earths.
• Grade and Composition: The overall grade is over 0.2% REE.
• Flowsheet Optimization: Recent test work has focused on maximizing the grade of valuable REEs by removing cerium, a light and abundant REE. This has resulted in solutions with 35% magnet rare earth and almost 50% heavy rare earth.
• Cerium Suppression: Test work demonstrates the ability to suppress 90% of cerium with zero loss to heavy rare earths, a significant advantage not common in many ore bodies. Further optimization involves removing iron first before cerium precipitation.

5. Economic Considerations and Cost Advantages:

• ISR Expertise: Cobra Resources has engaged Ben Juke, a principal hydrologist with extensive ISR uranium experience, to champion field studies.
• Pump Rates and Transmissivity: Field studies have achieved pump rates of just under 20,000 liters per day at consistent, maintainable rates, equating to a transmissivity of over one meter per day.
• Shallow Aquifer Impact: The shallow depth of the aquifer limits injection rates due to lower head pressure compared to deeper uranium deposits, but this is not due to permeability.
• Reagent Loss Control: Push-pull injection and centralized extraction wells are expected to provide good control over fluid migration and minimize reagent loss.
• Natural Acid Generation: A significant cost advantage is the ore body's natural high organic content. When an oxidant is introduced, it produces sulfuric acid, a primary cost in REE recovery. This offers an opportunity to decouple from supply chain risks, particularly from China, and reduce costs.
• Low Acid Consumption: Cobra Resources aims for significantly lower acid consumption compared to traditional ionic clay REE projects. They are targeting less than 4 kg of acid per ton of ore, with potential for further reduction.
• Modular and Scalable Infrastructure: The processing infrastructure, including pH adjustment and filtration, can be housed in shipping containers, allowing for modular and scalable development with low capital expenditure (CAPEX). This also facilitates rehabilitation of land post-mining.
• Production Target: A reasonable production target for a commercial ISR operation is estimated at 4,000 to 5,000 tons of mixed rare earth carbonate per year, achievable with light CAPEX and potentially in a staged approach.

6. Environmental and Social Aspects:

• South Australian Jurisdiction: Operating in South Australia, a jurisdiction with established ISR operations, provides regulatory clarity.
• No Acid Mine Drainage Risk: The ore body is confined, and the mineralization is not in saprolite, eliminating the risk of acid loss that induces acid mine drainage.
• Water Resource: The aquifer is twice as salty as seawater, minimizing environmental or agricultural impact on the water resource.
• Water Reversion: Plans include reverting used and acidified water back to its natural acidity using locally sourced carbonate sand as a filtration medium, demonstrating socially responsible mining.
• Social License to Operate: Cobra Resources has secured social license, including stakeholder engagement and an NTMA (Native Title Mining Agreement) for key tenements.

7. Next Steps and Timeline:

• Infield Pilot Study: The next step is an infield pilot study, which can be conducted cost-effectively with existing infrastructure.
• Resource Drill Out: Drilling is expected to commence early next year and will take a couple of months. A resource announcement will follow.
• Scoping Study: Key inputs for economic modeling have been completed. The timeframes between resource definition and economic analyses are expected to be short.
• Race to Market: Cobra Resources acknowledges the competitive landscape and aims to advance the project with efficiency to be well-positioned for funding.

Mana Hill Copper Project

Cobra Resources also holds an option over the Mana Hill copper project, located in an area of prospective geology that was previously locked up due to native title.

• High-Grade Intersections: The project has demonstrated significant copper grades, with a previous hole intersecting 48 meters at 2.2% copper and nearly 8 grams of gold from 11 meters depth.
• Shallow Mineralization: The mineralization is shallow, making it potentially economic.
• Defined Strike: 1.6 kilometers of strike has already been defined, with geological interpretation suggesting considerable scale.
• Upcoming Work: Approvals are in place to commence work. This will include geophysics and drilling of the "Blue Rose" target, expected before or after Christmas.

Conclusion and Key Takeaways

Cobra Resources is strategically positioned to capitalize on the growing demand for critical minerals, particularly heavy rare earths. Their Bolan project stands out due to its unique paleo channel geological setting, which facilitates a more efficient and environmentally sound ISR operation. Key advantages include:

• Reduced Operational Challenges: Paleo channel setting avoids issues common with clay-hosted deposits.
• Cost Advantages: Natural acid generation and low acid consumption significantly reduce operating costs.
• Environmental Benefits: Confined aquifer, minimal water impact, and plans for water reversion contribute to a strong ESG profile.
• Scalability and Modularity: The processing approach allows for staged development and low CAPEX.
• High-Value Product: Focus on heavy and magnet rare earths, with successful cerium suppression, targets high-demand market segments.

The company is progressing systematically, with a clear roadmap for resource definition, pilot studies, and economic assessments. The Mana Hill copper project offers a complementary asset with high-grade, shallow mineralization, further enhancing Cobra Resources' portfolio. The company's focus on cost-effectiveness, environmental responsibility, and strategic market positioning suggests a strong potential for future value creation.