- First Cobalt owns the only permitted cobalt refinery in North America and is looking at the necessary requirements to restart production there
- Three studies evaluated potential costs, supply chain options and permit issues
- The studies found that the refinery could be restarted within 18 months at a throughput of 24 metric tons of material per day
- First Cobalt is working to establish suitable feedstock sources and downstream financing, possibly through offtake agreements
Pure-play cobalt company First Cobalt Corp. (TSX.V: FCC) (OTCQX: FTSSF) (ASX: FCC) is beginning to play its cards as it contemplates the possibilities of initiating North American production of the in-demand metal from facilities in eastern Canada.
On October 10, First Cobalt announced the results of three studies (http://ibn.fm/ZTPAe) examining the feasibility of restarting the company’s shuttered cobalt refinery in Ontario, the only permitted cobalt refinery on the North American continent capable of producing cobalt battery materials and, as such, a key potential domestic supply source of cobalt sulfate for the computer-powering lithium-ion battery market or, alternatively, cobalt metal for aerospace and industrial sectors.
First Cobalt has been focused on exploring the potential for mining cobalt from its flagship Iron Creek Cobalt Project site in the western United States in recent months, and it also holds significant past-producing assets in the famed Cobalt Camp region of Ontario where the refinery is located. Separate from this work, these three recent studies evaluated the refinery’s potential to restart production independent of any specific expectations for the company’s projects to provide feedstock. The analyses therefore present a baseline of expectations that could rapidly expand in terms of profitability if the Iron Creek site in Idaho proves to be a feasible mining operation. A maiden resource estimate completed in September provided encouragement toward that end (http://ibn.fm/y288n).
The three studies examined the estimated costs of restarting the refinery, as well as subsequent operational costs, the costs and time necessary to renew or obtain necessary permits and the product pipeline’s potential budgetary impacts in terms of cobalt sourcing and end-user offtake agreements to secure a client base.
The company determined that the refinery could be restarted within 18 months of securing feed utilizing its existing facilities and permits, even if those permits need to be renewed or amended (http://ibn.fm/QTuWd). Cobalt feedstock would likely come from three primary sources: concentrate from as-yet unspecified mining operations, hydroxide material from the Democratic Republic of the Congo that could be established as free of the ethical labor concerns that plague the DRC and recycled battery materials from North America. The output, at least initially, would be an expected 24 metric tons per day, or between 568 and 1,063 metric tons per year depending on a feed grade of between eight and 15 percent cobalt.
Restart capital injection costs are estimated at nearly $26 million, including a 30 percent contingency plan allotment. Yearly operating costs are estimated at over $6.7 million, with an estimated $2.5 million more for crystallization if sulphate is the preferred product.
“The First Cobalt Refinery is a strategic North American asset and potentially our quickest path to cash flow by producing cobalt materials for the North American market,” First Cobalt CEO Trent Mell stated in a news release. “The facility is in excellent condition with permits in place and a short timeline to potential production, as well as optionality for both sources of material and refined product… We believe that the single best use of the refinery is to provide cobalt for the U.S. market, which does not currently produce a meaningful supply.” Mell added that, “While no decision for start-up has been made to move forward, we are reviewing funding alternatives that would minimize equity dilution for our shareholders today and in the future.”
The first study, conducted by engineering firm Primero Group, examined the possibility of expanding production to as much as 50 tpd. The 24 tpd base case scenario rate relies on two autoclaves that exist in the facility, although the second autoclave wasn’t fully commissioned during previous operations. The 50 tpd expansion would require replacement of all processing equipment in the facility, which the company says is nearly complete.
First Cobalt’s permits include use of its tailing pond, which the company estimates would require expansion after eight years under the 24 tpd scenario. The news release notes that the company would then be able to use 80 acres to the north of the refinery for additional tailings storage.
Following the favorable review of First Cobalt’s prospects for firing up the refinery during the next year and a half, the company states that its next priorities are establishing suitable cobalt feedstock sources and deciding whether its best interests lie in producing sulfate or metal. First Cobalt can then begin detailed engineering and permitting while working to complete offtake agreements or other financing solutions.
For more information, visit the company’s website at http://ibn.fm/FTSSF
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