First Cobalt arranging US$45 million financing

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First Cobalt Corp. [FCC-TSXV; FTSSF-OTCQB; FCC-ASX] said Tuesday March 30 that it has entered into an exclusivity agreement with a leading financial institution for US$45 million in debt financing to fund the capital cost of relating to the recommissioning and expansion of its First Cobalt refinery in Ontario.

The exclusivity period provides the basis for which the lender will complete its remaining due diligence requirements prior to the negotiation of definitive documentation.

The financing process, which is being led by CIBC Capital Markets, is expected to be completed prior to the announcement of a formal construction decision.

In December, 2020, the government of Canada and the government of Ontario announced a joint $10 million investment in the First Cobalt refinery to help accelerate commissioning and expansion.

Swiss metals trading giant Glencore AG and IXM SA (a unit of China Molybdenum Co. Ltd. (CMOC)) have agreed to provide cobalt feedstock to the refinery.

That feedstock will be sourced from Glencore’s KKC mine and CMOC’s Tenke Fungurume. Both mines are located in the Democratic Republic of Congo.

First Cobalt said it has entered into long-term cobalt hydroxide feed arrangements with Glencore and IXM, which will provide a total of 4,500 tonnes per-year of contained cobalt to First Cobalt’s refinery.

The supply agreements represent 90% of projected capacity for the refinery, yielding 22,250 tonnes per year of battery grade cobalt sulfate.

On Tuesday, First Cobalt shares edged up 1.35% to 37.5 cents on volume of 391,383. The shares are currently trading in a 52-week range of 47 cents and $0.10.

Meanwhile, the company said permitting remains on schedule, supporting a commencement of construction in mid-2021.

“We are on track to achieving our goal of commencing construction in mid-2021 and full commissioning in the second half of 2022,” said First Cobalt President and CEO Trent Mell. “Progressing into an exclusivity phase for a debt facility without a royalty or stream represents a key milestone in securing the remaining capital needed to restart the First Cobalt refinery and brings us one step closer to our vision of producing the world’s most sustainable cobalt,’’ he said.

Back in August, 2019, First Cobalt announced that Glencore had agreed provide a US$5 million loan to fund the recommissioning of the company’s refinery. First Cobalt also said a scoping study had previously estimated that if the First Cobalt Refinery operated at 55 tonnes per day, it could produce 5,000 tonnes of contained cobalt annually in sulfate, assuming a cobalt hydroxide feed, grading 30% cobalt.

Under the terms of the binding cobalt hydroxide supply contract, Glencore AG will supply the First Cobalt Refinery from the KCC mining operation for five years, commencing in the fourth quarter of 2022. First Cobalt has also signed a memorandum of understanding with IXM for cobalt from CMOC’s Tenke Fungurume mining operation in the DRC over the same period.


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