TORONTO, Sept. 24, 2020 /CNW/ - First Cobalt Corp.
(TSX-V: FCC) (OTCQX: FTSSF) today provided an update on its ongoing
engineering studies for its permitted cobalt refinery in
Ontario, Canada. The Company now
estimates operating costs of $2.36
per pound of cobalt produced, which represents a 13% reduction that
improves refinery margins, enhances project economics, and further
solidifies the Refinery's global competitiveness.
KEY HIGHLIGHTS
- Operating costs estimate reduced from $2.72/lb of cobalt produced to $2.36/lb of cobalt produced, resulting in
approximately $4 million of increased
annual pre-tax cash flows compared to results in the May 4 engineering study
- Updated capital estimate of $60
million compared to $56
million in the original engineering study
- $41 million in undiscounted
pre–tax free cashflow to the Project forecasted during the first
full year of production
- Glencore and First Cobalt have established a Joint Technical
Committee that continues to work on further technical and cost
enhancements to the refinery.
- Final permit amendments and closure plan on track to be
submitted before the end of the year
- Financing process has moved to phase 2 and the Company is
assessing several third-party financing proposals as discussions
continue to advance with the private sector and government
agencies
The latest engineering work reinforces the value of the First
Cobalt Refinery and the long-term value proposition for investors.
With a competitive operating cost structure and improved cash
flows, the Refinery clearly establishes itself as an important
component of the growing North American electric vehicle supply
chain.
All amounts in this news release are in US dollars unless
otherwise indicated. The engineering study assessed the
project economics of the Refinery on a stand-alone basis, assuming
a 70% payability factor on the cobalt content of a cobalt hydroxide
feed source based on expert forecasts for future payability levels.
In order to secure the capital required and a reliable feed source,
First Cobalt and Glencore are expected to negotiate terms of a two-
to five-year tolling agreement and financing arrangement. As such,
the cash flow generated from the Refinery will be shared between
the parties and remains subject to ongoing discussions.
On May 4, First Cobalt released
results of an engineering study demonstrating strong project
economics for significant expansion to First Cobalt's permitted
Canadian refinery for what would become North America's only producer of battery-grade
cobalt for EV manufacturers. The study estimated the Refinery could
produce 5,000 tonnes of cobalt per year, resulting in 25,000 tonnes
of cobalt sulfate product for EV batteries.
The Company then commenced an optimization program targeting
several opportunities to improve the project economics, including
higher cobalt recoveries, extending the life of the dry-stack
tailings facility and assessing alternative approaches to managing
elevated levels of sodium sulfate in effluent.
Glencore and First Cobalt established a Joint Technical
Committee to assess these areas and other opportunities identified
by Glencore's processing team. The Committee is comprised of
representatives from First Cobalt, Ausenco, Glencore, Glencore
Technology and XPS, all of whom have extensive experience in
mineral processing, refining and operations.
The significant improvement in operating costs reported today
are the result of an alternative approach to managing sodium
sulfate in effluent. SGS has commenced new leach tests, that are
expected to yield much higher recoveries that the 93% reported in
the May 4 engineering study. Receipt
of cobalt hydroxide feed material from Glencore's KCC mining
operation was received one week ago, owing to COVID-related
logistical delays. This in turn, has delayed the commencement of
the continuous pilot plant, which will be underway in the coming
weeks in consultation with the Joint Technical Committee.
A process led by CIBC to identify third party debt financing
partners resulted in numerous proposal submissions, of which
several have been retained for further discussion. Conclusion of
the financing arrangement and a Glencore commercial contract is not
expected until pilot plant work and other project enhancements have
progressed.
All parties remained committed to creating a world-class
project. As the only permitted cobalt refinery capable of serving
the North American EV market, the project continues to be viewed as
a strategic North American asset with a first mover advantage to
capitalize on a growing battery supply chain in North America and Europe.
Trent
Mell, First Cobalt President & CEO, added:
"The Joint Technical Committee
recently formed with Glencore has supported our ongoing work on
refinery tradeoff studies and identified new opportunities that
First Cobalt is now studying. We continue to work on a commercial
contract while we pursue additional project optimization work with
a global team of engineers and operators that has presented
opportunities to First Cobalt to deliver improved project
economics.
Our goal is to commission a
world-class, globally competitive refinery for the European and
North American EV markets and it is imperative that we look at
every opportunity to ensure our success."
Project Enhancements
A significant component of total operating costs in the original
study, representing a cost of $0.85/lb, involved production, handling, and
off-site storage of a mixed sulfate waste product. This waste
product consisted primarily of sodium-sulfate. Given the large cost
associated with managing this product, it was a primary target for
the current work program. The revised approach is to refine the
mixed sulfate waste product into a commercial grade sodium sulfate.
Sodium-sulfate is a chemical used in a variety of industrial
processes and as an additive in consumer goods. The current study
took the conservative approach of assuming that this commercial
grade product would simply be given away and therefore would not
generate any revenue thus removing a large degree of market
uncertainty for this stream. Depending on market conditions at the
time of start up, it is conceivable that sales of this product
could produce a small revenue stream.
The original study identified a total phase 1 tailings capacity
of 17 years of which only the first 11 years were considered in the
economic evaluation. The current study incorporated the full phase
1 capacity, resulting in 13 years of tailings life due to extra
tailings being produced as a result of producing a commercial grade
sodium sulfate. The process that produces the commercial grade
sodium sulfate itself makes additional tailings. The Company owns
another tract of land immediately adjacent to the phase 1 area
which could provide an additional 13 years of dry-stack tailings
capacity.
One of the major new pieces of equipment required for the
production of cobalt sulfate is a crystallizer. The crystallizer
and associated equipment are another area that was examined in the
current study due to its large cost. Working with vendors already
engaged on this project, we have been able to identify an alternate
crystallizer supplier. The crystallizer that has been incorporated
into the updated study is approximately $1M less expensive and expects to achieve
production of the higher quality "heptahydrate" form of cobalt
sulfate.
Permitting
Regarding the ability of First Cobalt to legally operate the
Refinery under the current regulatory regime in Ontario, three environmental approvals and a
closure plan amendment are required. The Air Environmental
Compliance Approval (Air ECA) and Industrial Sewage Works
Environmental Compliance Approval (ISW ECA) have been submitted,
approved and amended from time-to-time by previous owners of the
Refinery and remain in good standing for historical throughput
levels. The Permit to Take Water (PTTW) is the third environmental
approval and requires renewal from time-to-time. A new PTTW
application was submitted in March
2020 and is expected to be received in Q4.
For the expansion scenario envisioned by the engineering study,
the Air ECA, ISW ECA and the Closure Plan will all require
amendment to reflect the new operating and environmental regimes.
The permit amendment applications are on track for submission
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.
Pilot Plant Testing
The Company has received additional cobalt hydroxide material
from Glencore's KCC mining operation in the Democratic Republic of Congo (DRC) to perform
continuous pilot plant testing. The pilot plant will focus on
both the leaching and solvent extraction processes, to both
increase cobalt recoveries and as part of standard procedures to
reduce any process risk prior to construction. SGS has commenced
new leach tests, that are expected to yield much higher recoveries
that the 93% reported in the May 4
engineering study. Cobalt hydroxide feed material from Glencore's
KCC mining operation was only received one week ago, owing to
COVID-related logistical delays. This in turn, has delayed the
commencement of the continuous pilot plant, which will be underway
in the coming weeks in consultation with the Joint Technical
Committee. The pilot plant test work is expected to be completed in
Q4 2020.
Next Steps
The Company expects to continue to advance and de-risk the
Project by pursuing the following activities:
- Complete all technical optimization programs, with assistance
from Glencore's technical team
- Complete continuous pilot plant test work on the leaching and
solvent extraction circuits and produce battery grade cobalt
sulfate product
- Submit the required permit amendments to operate at the
expanded 55 TPD throughput rate
- Continue to pursue opportunities to further reduce operating
costs
Upon completing the activities noted above, a commercial
contract and financing package will be finalized prior to a formal
construction decision. The financing process, being led by CIBC,
has progressed to phase 2. The Company received numerous initial
proposals to fund the refinery capital costs and has now selected
several of these to move to the next phase of due diligence.
About First Cobalt
First Cobalt owns North
America's only permitted cobalt refinery. Cobalt refining is
a critical component to 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 owns
a cobalt project in the United
States and controls significant silver and cobalt 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,
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.