NetworkNewsWire Editorial
Coverage: In July 2017, France
and Britain declared their intention to prohibit the sale of cars
operating on fossil fuels by 2040 (http://nnw.fm/PnY5f), opening the door for automotive
manufacturers to focus their future developments on electric
vehicles (EVs). Cobalt is a critical element of the lithium-ion
batteries used in EVs, and investors are starting to take notice
that increasing demand for electric cars will likely push cobalt
into a supply deficit, sending prices of the metal higher. As a
result, cobalt producers are employing their expertise in
geosciences and exploration to develop current mining assets and
search for new deposits. Prominent among them is First
Cobalt Corp. (TSX.V: FCC) (OTCQB: FTSSF)
(FTSSF
profile), a Canadian company focused on the
development of its assets in the Cobalt Camp of Ontario mining
area. First Cobalt is joined by Swiss-based Glencore Plc
(OTC: GLNCY), Freeport-McMoRan, Inc. (NYSE:
FCX), eCobalt Solutions, Inc. (OTC:
ECSIF) and other companies endeavoring to meet the
increased demand of cobalt from Tesla, Inc. (NASDAQ:
TSLA) and other automakers leaning toward electric
vehicles.
Nearly all the cobalt mined throughout the world is found as a
by-product of nickel or copper, and on some occasions silver. The
Democratic Republic of the Congo (DRC) is currently the largest
producer of cobalt globally. However, the DRC is not attractive
from an investment point of view due to the numerous incidents of
unrest and political instability in the country. In addition, its
mining industry is rife with exploitation and the use of child
labor. This has led new cobalt producers to focus their mining and
exploration efforts on North America.
While First Cobalt
Corp. (TSX.V: FCC) (OTCQB: FTSSF) is primarily focused on its
Greater Cobalt Project located near the aptly named Cobalt,
Ontario, the company is in the middle of a three-way merger with
Cobalt One Ltd. (ASX: CO1) and CobalTech Mining Inc. (TSX.V: CSK).
Once the merger is finalized, First Cobalt will control over 10,000
hectares (nearly 25,000 acres) of prospective land and more than 50
historic mining operations in the Cobalt Camp in Ontario, Canada,
as well as a portfolio of high-quality exploration assets,
including a fully permitted refinery and a mill facility.
The Cobalt Camp is of considerable interest to the company, as
an initial mineralogical assessment of sample material taken from
various historical mines located throughout the Cobalt Camp show
both cobalt-rich and silver-rich mineralization styles.
Earlier this week First Cobalt reported high-grade (up to 1.14
percent) cobalt from muckpile sampling at the historic Silver
Banner mine at the northern part of the Cobalt Camp. These results
confirm the presence of a productive vein system in the area,
similar to that seen at the company’s Bellellen (located within the
Greater Cobalt Project), Keeley and Frontier mines.
“We have quickly identified several prospective cobalt
targets within the First Cobalt, CobalTech and Cobalt One land
packages and we are confident others will follow. As with Bellellen
and Drummond, the positive results at Silver Banner make it an
excellent candidate for additional work. The next task is to
prioritize these targets for more focused exploration work and
drilling through the winter months,” First Cobalt president and CEO
Trent Mell stated in the news release announcing the results
(http://nnw.fm/h2EYi).
A look at the historic production of Silver Banner further
emphasizes the company’s optimism in the underexplored mafic
volcanic rocks at the mine.
Mining at Silver Banner occurred intermittently from 1927 to
1958, producing approximately 40,000 oz of silver, some copper and
unspecified amounts of cobalt. First Cobalt believes that the short
production history of this mine may be attributed to a cobalt-rich
and silver-poor vein system, making Silver Banner an “attractive
drilling target for 2018” and a “high priority for immediate
work.”
The company’s next step is to conduct follow-up work including
shallow drilling near the historic workings to define the
orientation of the vein system and test for the metal content of
the veins as well as in the footwall and hangingwall rocks. Because
similar mineralization occurs at the nearby historic Ophir mine,
follow-up exploration work is being done over an area spanning
approximately 25 square kilometers (9.65 square miles).
With strategic human capital in geosciences, mining, engineering
and business development, First Cobalt is in a strong position to
leverage its potential against an economic background that
forecasts global consumption for refined cobalt will grow at an
average rate of approximately 5 percent per annum for the next 10
years.
Furthermore, its focus on North America sets it apart from key
industry players such as Glencore Plc (OTC:
GLNCY), a mining giant with a market cap of over $70
billion. Though the company produces nearly a third of the world’s
cobalt annually, nearly two-thirds of its supply comes from the
DRC, which has experienced a drop in cobalt production this year
due to political instability. This resulted in a jump in cobalt
prices, which reached $61,000 per ton in July 2017. Glencore’s
third-quarter results for 2017 showed cobalt production from its
own sources of 19.8 kilotons year-to-date, a drop of 6 percent over
the same period in 2016.
In May 2017, the world’s largest publicly traded copper mining
company, Freeport-McMoRan (NYSE: FCX) sold a
majority stake in its Congolese Tenke Fungurume mine to the China
Molybdenum Co Ltd (CMOC) for $2.65 billion. Freeport had a 70
percent holding in TF Holdings, which in turn held an 80 percent
interest in the Tenke Fungurume copper mine, which is also one of
the DRC’s largest cobalt producers. In June 2017, the company
agreed to terminate discussions with CMOC on the acquisition of its
other cobalt assets, which include the Kokkola cobalt refinery in
Finland and the Kisanfu exploration project in the DRC. But
Freeport still intends to retain its cobalt business interests via
a supply agreement with the Tenke Fungurume mine for the next 10
years at least. Freeport has a market cap of over $21 billion.
Another key industry player is eCobalt Solutions (OTC:
ECSIF), a Canadian company with interests in base and
precious metals, as well as uranium projects in Canada, the United
States and Mexico. The company’s cobalt interests are focused on
the Idaho Cobalt Project (ICP), one of the few primarily cobalt
deposits in the world, which leaves it unaffected by copper and
nickel markets. eCobalt sees this development as an opportunity to
divorce itself from the risks of operating in the volatile and
politically unstable DRC. Initial engineering studies have
indicated that this project has the potential to produce cobalt of
high purity, which would be suitable for applications in
aerospace.
On track to become one of the world’s largest producers of
lithium ion batteries, Tesla (NASDAQ:
TSLA) will stand to benefit from – if not rely on -
increased cobalt supply from North America. Valued at $51+ billion,
Tesla’s primary focus is to develop reliable and affordable
electric cars. In 2015 Tesla launched its Gigafactory to meet its
goal of producing 500,000 cars per year by 2018. This lofty goal
would require today’s entire global supply of lithium-ion
batteries, according to the electric carmaker’s website. As it
stands, there is not enough cobalt production to meet the supply
demands from Tesla and Chinese and European automakers over the
next five years, according to a recent Financial Times article.
This fact underscores the market potential for small and
large-cap cobalt players willing to shift their focus and
operations to areas outside the DRC and take advantage of
increasing demand for cobalt amid heightened interest and push for
EVs worldwide.
For more information on First Cobalt Corp.,
visit First Cobalt
Corp. (TSX.V: FCC) (OTCQB: FTSSF).
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