TORONTO, July 22, 2020 /CNW/ - First Cobalt
Corp. (TSXV: FCC) (OTCQX: FTSSF) (the "Company") today
provided an update on the recommissioning and expansion of its
cobalt refinery located in Canada.
HIGHLIGHTS
- Intention to move directly to an expansion scenario and conduct
pilot plant work at third party facilities, saving millions of
dollars and generating stronger returns for shareholders
- Optimization studies for the Refinery Project are advancing,
with significant opportunities identified to lower operating
costs
- Financing discussions are entering phase two, with proposals
under review with First Cobalt financial advisor CIBC
Trent Mell, First Cobalt
President & CEO, commented:
As we execute our business plan, we have concluded that the
optimal development scenario is to conduct additional product and
process flow sheet testing at third party facilities. I am pleased
by this outcome as an on-site demonstration plant would have
resulted in higher capital costs, a longer development timeline and
limited benefits to the project. Meanwhile, the engineering
optimization work has identified opportunities to reduce the
operating costs of the refinery and the financing talks are
progressing. We have received several third party financing
proposals and we will now seek to narrow the field in order to
commence three-way discussions with our strategic partner.
On May 4, First Cobalt released a
detailed engineering study for an expansion of its permitted cobalt
refinery from a 12 tonnes per day (tpd) operation to a 55 tpd
facility, transforming the facility into a globally competitive
refiner of cobalt for the North American and European electric
vehicle (EV) markets. Since that time, the Company has been
conducting engineering optimization studies and advancing financing
and permitting activities. The expanded refinery would represent up
to 5% of global demand for refined cobalt.
The Company also completed an assessment of a restart of the
Refinery using existing permits and equipment to operate a
demonstration plant using the current 12 tpd configuration. The
study assessed whether First Cobalt could leverage existing
permits, infrastructure and equipment to produce sample cobalt
sulfate material in advance of the major expansion. In consultation
with Glencore and prospective EV partners, the Company concluded
that the optimal economic decision is to conduct pilot plant
testing at third party sites and focus construction efforts on the
55 tpd expansion.
Proceeding with an on-site demonstration plant would have
resulted in several million dollars of additional investment that
would not have been credited toward the 55 tpd expansion, currently
estimated at US$56 million. Moreover,
EV manufacturers expressed no preference for an on-site
demonstration plant, as final product qualification will be
conducted from material produced at the expanded refinery.
Management is pleased with this outcome as it will reduce costs and
complexities and allow the project team to focus its efforts on
building a globally competitive facility that will be the only
North American refiner of cobalt sulfate.
A key focus of the optimization work has been to assess
alternative approaches to managing sodium. Process water from the
Refinery will be treated to a level that meets or exceeds
regulatory requirements before being returned to the environment.
However, owing to the use of sodium hydroxide in the process
flowsheet that has been designed, effluent from the refining
process would have an elevated concentration of sodium. The
engineering study contemplated installing an established
technological solution of evaporation and crystallization to remove
sodium content but the cost of this solution represents
approximately 30% of the refinery operating cost of US$2.72/lb of cobalt produced. The Company is in
discussion with various vendors and is making progress on
alternatives that will achieve the same environmental standards at
a significantly lower cost. Results of this work are anticipated in
August.
Other elements of the current work program include optimizing
storage capacity in the dry-stack tailings facility and preparing
submissions for permit amendments. Both are progressing as
expected. Metallurgical test work to validate expected improvements
in cobalt recoveries have been delayed due to pandemic-related
logistical delays in receiving representative cobalt hydroxide feed
material from Glencore's designated mining operation. Based on work
completed to date, the Company is confident that it will be in a
position to demonstrate higher recoveries in Q3-Q4 2020.
The Company has completed the first round of discussions to
identify financing parties that could partner with Glencore to fund
the refinery capital requirements. CIBC is advising First Cobalt on
this process and the market feedback has been encouraging. The
Company is reviewing proposals with a view to commencing advanced
discussions with one or more counterparties along with Glencore to
conclude financing and commercial terms.
Refinery Overview
The First Cobalt Refinery is a hydrometallurgical cobalt
refinery located on 120 acres north of Toronto, Canada. The facility was permitted in
1996 with a nominal throughput of 12 tpd and operated
intermittently until 2015, producing a cobalt carbonate product
along with nickel carbonate and silver precipitate. Testing of
third-party cobalt hydroxide in 2019 confirmed suitability of
cobalt hydroxide as a source of feed to produce a high purity,
battery grade cobalt sulfate.
In July 2019, First Cobalt and
Glencore AG agreed to a partnership framework 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 5 years on a tolling basis, with Glencore providing up to 100%
of the capital required to recommission and expand the facility.
None of the feed material would be sourced from First Cobalt's
mineral projects. The objective is to produce approximately 25,000
tonnes of cobalt sulfate per annum for the electric vehicle
market.
About First Cobalt
First Cobalt owns North
America's only permitted cobalt refinery. Cobalt refining is
a critical component in the development and manufacturing of
batteries for electric vehicles and forms a foundational piece of
the next generation of the North American auto sector and other
electrified consumer and industrial applications. First Cobalt also
owns a cobalt project in the United
States and controls significant mineral assets in the
Canadian Cobalt Camp, including more than 50 past producing
mines.
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.
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 timeframes 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.