First Cobalt releases positive feasibility study for refinery expansion

First Cobalt Corp. [FCC-TSXV; FTSSF-OTCQX] has released positive results from an independent feasibility study conducted on its permitted cobalt refinery in Ontario, Canada. The study contemplates expanding the existing facility and adapting it to be North America’s first producer of cobalt sulphate, an essential component in the manufacturing of batteries for electric vehicles.

The feasibility study demonstrates that the First Cobalt refinery project can become a viable, globally competitive player in the North American and European electric vehicle (EV) supply chain. The study reinforces the strength of First Cobalt’s business strategy for a rapidly evolving EV (electric vehicle) market that is heavily dependent on supply from China.

Feasibility study highlights include annual production of 25,000 tonnes of battery-grade cobalt sulphate from third party feed, representing 5% of the total global refined cobalt market and 100% of North American cobalt sulphate supply. Initial capital estimate is $56-million and an operating cost estimate of $2.72/lb of cobalt produced, which is competitive with global markets. There would be a $37-million in undiscounted pre-tax free cash flow to the project forecasted during the first full year of production and a $139-million after-tax net present value (NPV) using an 8% discount and 53% after-tax internal rate of return (IRR), representing a payback period of only 1.8 years. (All figures in US$ with cobalt price at $25/lb)

Discussions under way with Glencore on commercial arrangements, financing and allocation of project economics; third party and government funding opportunities also under review;

Several EV manufacturers have expressed an interest in purchasing a North American cobalt sulphate;

Several opportunities will be evaluated over the coming months that could enhance project economics further, including alternative approaches to managing elevated sodium concentrations prior to returning process water to the environment.

Prefeasibility-level study also completed on an early ramp-up scenario using existing permits and equipment to conduct trial runs processing a different type of feedstock.

Trent Mell, First Cobalt President and CEO, commented: “This is an important milestone in our efforts to disrupt the existing cobalt supply chain. The study shows strong asset-level economics that position the refinery to be competitive globally and provide attractive investment returns. The outlook for electric vehicles and the push by automakers to develop shorter supply chains creates an excellent opportunity. With most of the world’s cobalt refining capacity located in China, there is strong demand for a North American alternative. Our focus will now turn to working with Glencore, our strategic partner, on implementing a new, ethical and transparent supply chain.”

Nico Paraskevas, Glencore’s head of copper and cobalt marketing, added: “I would like to congratulate the First Cobalt team on a positive feasibility study. As the world transitions to a low-carbon economy, cobalt will play an essential role in the growth of mobility electrification. We look forward to working with First Cobalt to bring a sustainable source of cobalt to the North American market.”

Project overview

The First Cobalt refinery was permitted in 1996 with a nominal throughput of 12 tonnes per day (tpd) and operated intermittently until 2015, producing a cobalt carbonate product along with nickel carbonate and silver precipitate. The facility is located on 120 acres, with two settling ponds and an autoclave pond. The current footprint also includes a large warehouse building that once housed a conventional mill.

Testing of third party cobalt hydroxide in 2019 using the refinery flow sheet confirmed suitability of cobalt hydroxide as a source of feed to produce a high-purity, battery-grade cobalt sulphate.

In July, 2019, First Cobalt and Glencore AG agreed to a partnership framework providing for a non-dilutive, fully financed, phased approach to recommission the refinery. Subject to certain conditions, including the completion of a positive feasibility study and agreement upon commercial terms, the framework agreement contemplates that First Cobalt will treat cobalt feed material supplied from Glencore’s DRC operations for an initial term of up to 4-1/2 years on a tolling basis, with Glencore providing up to 100% of the capital required to recommission and expand the facility. The objective is to produce approximately 25,000 tonnes of cobalt sulphate per annum for the electric vehicle market.

Refer to First Cobalt press release for more details.