TORONTO, May 13, 2020 /CNW/ - First Cobalt Corp. (TSX-V:
FCC; OTCQX: FTSSF) today announced a $2.1
million work program for its cobalt refinery in Ontario, Canada. The program is intended to
build upon the successful feasibility study completed on
May 4 to further improve the
project's long-term success and viability.
WORK PROGRAM HIGHLIGHTS
- Prepare and submit permit amendments to expand the refinery to
its design rate of 25,000 tonnes per annum of cobalt sulfate
- Assess alternative approaches to manage effluent sodium levels
to lower capital and operating costs and further enhance project
economics
- Conduct additional metallurgical test work to increase cobalt
recoveries
- Extend project economics assessment from 11 years to 17 years
to align with the phase 1 dry stack tailings design storage
capacity
- Scoping studies in progress to assess three early commissioning
strategies to operate as a demonstration plant and produce sample
product for EV manufacturers
- Target substantial completion for most of the work program
within 90 days
Trent Mell, First
Cobalt President & CEO, commented:
"This work will enable us to meet our
commitments to shareholders and stakeholders to move the project
forward in 2020. According to Benchmark Mineral Intelligence, there
are currently no plans to commission new cobalt refineries outside
of China other than First Cobalt.
China accounts for approximately
79% of the world's refined cobalt sulfate production and we are
seeing that many automotive companies outside of China are interested in sourcing cobalt
sulfate closer to their manufacturing facilities."
Peter Campbell,
P.Eng., First Cobalt Vice President, Business Development
added:
"The feasibility study that we released last
week demonstrated very strong economics for an expanded First
Cobalt Refinery producing cobalt sulfate for the battery market.
The study also identified several opportunities that could further
enhance project economics and today's work program announcement
intends to address several high impact opportunities over the next
90 days. I am confident that our project team will be able to build
upon the strong results we already achieved."
The Company recently completed a feasibility study on its
permitted refinery demonstrating 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 confirmed that the facility could become North America's only producer of cobalt
sulfate in an EV market that today is entirely dependent on foreign
supply.
The report estimates an initial capital cost of US$56 million, US$37
million in undiscounted pre‐tax free cashflow to the Project
forecasted during the first full year of production and a 53%
after-tax internal rate of return, representing a payback period of
1.8 years. The study outlined a number of measures that the Company
should pursue to further improve the economic returns from the
facility.
Project Overview
The First Cobalt Refinery is a hydrometallurgical cobalt
refinery located north of Toronto,
Canada. The facility 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.
In July 2019, First Cobalt and Glencore AG agreed to a
partnership framework providing for a non-dilutive, fully funded,
phased approach to recommission the Refinery. Subject to certain
conditions, 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 4½ years on a tolling
basis, with Glencore providing up to 100% of the capital required
to recommission and expand the facility.
A May 4, 2020 feasibility study
confirmed the Refinery's suitability to treat cobalt hydroxide and
produce a high purity, battery grade cobalt sulfate. In conjunction
with the feasibility study, discussions have been ongoing with
potential automotive offtake partners as well as several lenders
interested in providing a portion of the capital cost along with
Glencore.
Sodium Management
Owing to the use of sodium hydroxide in the proposed process
flowsheet, effluent from the refining process would have an
elevated concentration of sodium. There are no federal or
provincial discharge limits nor surface water quality objectives or
guidelines for sodium but it was determined that the amount of
sodium in the effluent could be toxic to aquatic life. The
study contemplates installing an established technological solution
of evaporation, crystallization and offsite disposal to manage
sodium content, which is a proven method but more expensive than
other alternatives.
First Cobalt and its consultants identified several other
solutions to manage the sodium that could significantly reduce
capital and operating costs. Due to feasibility study time
constraints, Ausenco incorporated an established treatment process
and recommended that alternatives be assessed over the next few
months.
The capital cost in the feasibility study for the selected
method is US$9.4 million representing
almost 17% of the total capital cost. The operating cost associated
with evaporation and crystallization is US$0.85/lb of cobalt produced, representing 31%
of the total operating cost. There is significant opportunity in
other sodium management methods that were reviewed but not assessed
in sufficient detail to be incorporated into the feasibility
study.
Permitting Advancement
Three environmental approvals and a closure plan are required to
operate the Refinery in Ontario. A
current closure plan is on file with the Ontario Ministry of
Energy, Northern Development and Mines (ENDM) and First Cobalt
recently increased the amount of Financial Assurance held as cash
by ENDM. An Air Environmental Compliance Approval (Air ECA) and an
Industrial Sewage Works ECA remain in good standing. A Permit to
Take Water (PTTW) is the third environmental approval and requires
renewal from time-to-time. As the Refinery has not operated since
2015, the current PTTW has expired. A new PTTW application was
submitted in March 2020, with the new
permit expected within 6 months.
For the expansion scenario envisioned by this feasibility study,
the Air ECA, Industrial Sewage Works ECA and the Closure Plan will
all require amendment to reflect the new operating and
environmental conditions. Work commenced in 2019 to collect
baseline and other data in support of these ECA amendments. First
Cobalt expects to be able to make an application for these ECA
amendments before the end of 2020. Based on the feasibility
work conducted to date, no hurdles have been identified which would
compromise the approval of these applications. Indigenous Community
and public consultation will be continuing throughout the ongoing
scoping studies and the approval process.
Other Deliverables
The feasibility study assumed a cobalt recovery of 93%, based on
a batch metallurgical testing and METSIM™ modelling that
yielded a 93.3% recovery. The Company and its advisors believe that
recoveries in excess of 95% can be achieved through additional
leach testing.
The phase 1 dry stack tailings design has 17 years of storage
capacity whereas the financial model assumes an 11-year project
life. The Refinery can continue operating indefinitely provided
sustaining capital expenditures are made to maintain and replace
parts and equipment over time. By extending the financial model for
the entire 17 years of the phase 1 tailing design or the 34 years
for phases 1 and 2, the NPV is expected to have a material
increase.
In tandem with the feasibility study, the Company completed a
prefeasibility level assessment of an early restart of the Refinery
using existing permits and equipment to operate at 12 tpd. The
resulting prefeasibility report was intended as a benchmark from
which various restart scenarios could be assessed. Using the
prefeasibility study as a benchmark, three scoping studies are
underway to assess alternate early commissioning scenarios. Results
will guide the Company's restart strategy to test the flow sheet
and produce sample cobalt sulfate product for EV manufacturers.
About First Cobalt
First Cobalt owns North
America's only permitted cobalt refinery. Cobalt refining is
a critical component in the manufacturing of batteries for electric
vehicles, consumer electronics and industrial applications. Cobalt
is a critical mineral and forms a foundational piece of the next
generation of the North American auto sector. First Cobalt also
owns an advanced cobalt project in the
United States and controls significant mineral assets in the
Canadian Cobalt Camp.
On behalf of First Cobalt Corp.
Trent Mell
President & Chief Executive Officer
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy
of this release.
Cautionary Note Regarding Forward-Looking
Statements
This news release may contain forward-looking statements and
forward-looking information (together, "forward-looking
statements") within the meaning of applicable securities laws and
the United States Private Securities Litigation Reform Act of 1995,
which relate to the proposed development of the First Cobalt
Refinery, the intended processing of cobalt hydroxide feedstock at
the First Cobalt Refinery and the ability to secure financing and
feedstock materials necessary to commence production at the First
Cobalt Refinery. All statements, other than statements of
historical facts, are forward-looking statements. Generally,
forward-looking statements can be identified by the use of
terminology such as "plans", "expects', "estimates", "intends",
"anticipates", "believes" or variations of such words, or
statements that certain actions, events or results "may", "could",
"would", "might", "occur" or "be achieved". Forward-looking
statements involve risks, uncertainties and other factors that
could cause actual results, performance and opportunities to differ
materially from those implied by such forward-looking statements.
Factors that could cause actual results to differ materially from
these forward-looking statements are set forth in the management
discussion and analysis and other disclosures of risk factors for
First Cobalt, filed on SEDAR at www.sedar.com. Although First
Cobalt believes that the information and assumptions used in
preparing the forward-looking statements are reasonable, undue
reliance should not be placed on these statements, which only apply
as of the date of this news release, and no assurance can be given
that such events will occur in the disclosed times frames or at
all. Except where required by applicable law, First Cobalt
disclaims any intention or obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
SOURCE First Cobalt Corp.