The Jervois Global Ltd (ASX: JRV) share price has been sold off on Wednesday.
In morning trade, the ASX All Ords mining share is down 30% to a 52-week low of 8.1 cents.
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Why is this ASX All Ords mining share crashing?
Investors have been hitting the sell button in a panic this morning after the ASX All Ords mining share released an update on its Idaho Cobalt Operations in the United States.
According to the release, the company has suspended the final construction at the Idaho Cobalt Operations due to continuing low cobalt prices and inflationary impacts on construction costs.
Management believes that doing so will preserve the value of its ore body, allowing it to capitalise on better prices in the future.
In respect to pricing, Jervois expects cobalt prices to recover over the medium term. This is due to the clean energy transition and the company's expectation that Western cobalt purchasers will increasingly prefer to buy from sources with Western ESG credentials.
The company intends to complete the construction and commissioning of Idaho Cobalt Operations once this happens. It has already spent US$130 million on construction activities.
Interestingly, despite suspending construction, Jervois believes it can still receive funds from the US Government in relation to programs that financially support the development of U.S. supply chains of critical minerals.
Management also advised that its US$100 million senior secured bonds remain due in July 2026, with no prior amortisation. However, it remains in compliance with its bond covenants and there is not expected to be an adverse impact on the bonds following the suspension of construction.
Finally, the ASX All Ords mining share has commenced a review of the operation's carrying value on its balance sheet, in accordance with applicable accounting standards.
