TORONTO, April 3, 2019 /CNW/ - First Cobalt Corp. (TSXV:
FCC)(ASX: FCC)(OTCQX: FTSSF) (the "Company") today announced it has
successfully produced a battery grade cobalt sulfate using the
First Cobalt Refinery flowsheet. This significant milestone brings
the Company closer to recommissioning the only permitted primary
cobalt refinery in North America.
With this information, discussions currently underway with
automotive companies, cobalt miners and capital providers can now
move to a more advanced stage.
Highlights
- Product assayed 20.8% cobalt, surpassing the reference grade
for sulfate pricing
- Product classified as "high purity", achieving over 99.9%
purity
- Test work carried out in single batches, offering ample
opportunity to improve product specifications to meet offtake
partner requirements through process optimization
- Potential to produce up to 2,000 tonnes of cobalt in product
per annum as the process excluded use of autoclave circuit,
allowing for increase in plant throughput
- Near term cash flow potential 18-24 months from sourcing of
feedstock, milestone advances these negotiations, as well as
offtake discussions
Trent Mell, President & Chief
Executive Officer, commented:
"Producing a battery grade cobalt sulfate is one of our most
significant accomplishments as the majority of refined cobalt for
the electric vehicle market is produced in Asia. With no cobalt sulfate production in
North America today, First Cobalt
stands to become the first such producer for the American electric
vehicle market.
"For our shareholders, this development brings us closer to
cash flow and will be our top priority in the year ahead. Third
party studies have confirmed that the permitted facility could be
recommissioned in 18-24 months. Furthermore, the cobalt hydroxide
used in these tests is currently sold at approximately 60% of the
prevailing cobalt price which could offer good margin opportunities
based on the findings of the previously released restart
study.
"We are encouraged by the interest shown in this strategic
asset by cobalt miners and EV companies alike and intend to move
swiftly to secure long-term feed supply and offtake contracts. We
are currently exploring a number of non-dilutive financing options
for the capital requirements to restart the facility. We intend to
have further updates on all aspects of the project over the next
quarter as we complete these discussions."
Henrik Fisker, First Cobalt
Director and Chairman and CEO of Fisker Inc., also commented:
"Electric vehicle demand in North
America will keep growing as companies such as Fisker Inc.
continue to introduce new, affordable EV models to the market.
Automakers and battery manufacturers have a responsibility to
ensure any materials we use in our batteries are sourced in an
ethical way. The First Cobalt team is dedicated to ensuring
projects maintain the highest standards of ethical mining practices
and environmental protection. The restart of the First Cobalt
Refinery is an important step towards producing battery materials
in America with a clean record from mine to machine."
The First Cobalt Refinery is the only permitted primary cobalt
refinery in North America and is
ideally suited to treat North American arsenic-rich mine
concentrate. Given the abundance of this higher grade material in
the market, the Company has been testing third party cobalt
hydroxide as an alternative source of feed.
Today's results confirm that the existing processes in the First
Cobalt Refinery are indeed capable of producing a high purity,
battery grade cobalt sulfate.
SGS Canada was engaged to test
cobalt hydroxide using the processes in the current refinery
flowsheet to assess its suitability as feedstock (see November 8, 2018 press release). Tests simulated
the existing circuits to determine the ability to produce a cobalt
sulfate heptahydrate ("cobalt sulfate"), a critical component of
lithium-ion batteries.
The current Refinery flowsheet includes an autoclave circuit as
well as a number of solvent extraction ("SX") lines for treating
various elements, followed by product precipitation and filtration
stages. Test work concludes that processing cobalt hydroxide feed
would not require the reactivation of the Refinery's autoclaves,
providing an opportunity for higher production potential than
projected in an independent study prepared by Primero Group. The
cobalt hydroxide feed tested in this program had head grades in
excess of 20% cobalt. By contrast, many other sources of cobalt
hydroxide have head grades approaching 30% cobalt, providing yet
another opportunity for higher production.
Commissioned in 1996, the refinery is located in Ontario, Canada, a few hours north by road or
rail from the US border. Once operational, the Refinery would
become the only North American producer of refined cobalt for the
North American EV market.
Given the strong cash flow projections derived from the Primero
Group study, the Company believes that a restart of the refinery
could be financed by non-equity sources of capital, limiting
dilution for shareholders and generating a steady source of cash
flow to fund future activities at the flagship Iron Creek Project
in Idaho, USA. The Company has
received significant interest from miners and automotive companies
and today's results will allow these discussions to advance to the
next stage. First Cobalt's objective is secure a long term feed
purchase agreement, offtake for the sale of refined cobalt and
financing for the capital requirements. It is estimated that the
refinery could be operational 18-24 months from the selection of a
feed source.
The Company has engaged Ausenco, a global consulting,
engineering, project delivery and asset operations, management and
optimization solutions firm to the minerals & metals, oil &
gas and industrial sectors to work in partnership with SGS Canada
on this next phase. The next step towards a potential restart of
the First Cobalt Refinery will include detailed engineering to
assess further refinements to the flowsheet and circuit
optimizations to maximize potential output.
First Cobalt Refinery
The First Cobalt Refinery is a hydrometallurgical cobalt
refinery in the Canadian Cobalt Camp, approximately 600 kilometres
from the U.S. border. The First Cobalt Refinery has the potential
to produce either a cobalt sulfate for the lithium-ion battery
market or cobalt metal for the North American aerospace industry or
other industrial and military applications.
In late 2018, the Company released the results of three
independent studies undertaken to estimate capital requirements,
operating costs, permit renewal timelines, potential feedstock
options and offtake opportunities. At a 24 tonne per day feed rate
and using the current flowsheet, the capital cost of the restart is
estimated at US$25.7M (including a
30% contingency) and a permitting review concluded that a restart
is possible within 18 months of selecting a feedstock.
The Company is engaged in discussions with companies
specializing in the marketing and sourcing of concentrates to
secure sources of ethically produced cobalt as feedstock for the
First Cobalt Refinery.
A corporate video featuring the First Cobalt Refinery in
Ontario, Canada is available on
the Company's website at
http://www.firstcobalt.com/investors/media-gallery/videos/.
A final decision on whether to put the Refinery back into
production has not been made at this time and any decision is
contingent on the outcome of the foregoing studies as well as the
Company's ability to source viable feedstock.
Refinery Restart Studies
On October 10, 2018, the Company
announced the results of three studies supporting a restart of the
First Cobalt Refinery. Primero Group, an Australian engineering
firm with an office in Montreal,
Canada, was engaged to conduct a desktop study to estimate
the capital and operating costs to operate the First Cobalt
Refinery in its current configuration at various throughput rates,
available at
www.firstcobalt.com/investors/downloads-and-filings.
As part of their study, Primero estimated the replacement value
of the refinery building at various throughput rates, including the
existing nameplate capacity of 24 tpd and an expansion scenario at
50 tpd. Primero's results ranged from US$53M to US$143M,
inclusive of a 30% contingency (see Table 1). In both instances,
replacement estimates were limited to the refinery building and did
not include site level infrastructure, including roadways, power
lines and the tailings management facility. The value of the
permits was also excluded for purposes of this exercise.
Table 1.
Replacement Value of First Cobalt Refinery (excluding site
infrastructure)
|
DESCRIPTION
|
COST (US$
MILLION)
|
24 TPD
(Base Case)
|
50
TPD
|
Mechanical
Cost
|
17.99
|
30.41
|
Discipline,
Infrastructure, Buildings
|
30.04
|
50.79
|
Total Direct
Cost
|
48.03
|
81.20
|
Indirect
Cost
|
16.87
|
28.52
|
Total Direct and
Indirect Cost
|
64.90
|
109.72
|
Contingency
(30%)
|
19.47
|
32.92
|
Total Project
Cost
|
84.37
|
142.64
|
The Company's base case scenario would be to resume refinery
operations at a rate of 24 tpd, for which Primero has estimated a
capital cost of US$20M plus a
US$6M contingency (see Table 2). This
estimate is subject to review once the Company has selected a
feedstock, which could entail minor modifications to the
flowsheet.
Table 2. Restart
Capital Estimate (3Q18, -30%/+50%)
|
DESCRIPTION
|
COST (US$
MILLION)
|
24
TPD
(Base Case)
|
Mechanical
Cost
|
3.88
|
Discipline,
Infrastructure, Buildings
|
11.33
|
Total Direct
Cost
|
15.22
|
Indirect
Cost
|
4.57
|
Total Direct and
Indirect Cost
|
19.78
|
Contingency
(30%)
|
5.94
|
Total Cost with
Contingency
|
25.72
|
Primero estimated annual operating costs for the Refinery based
on similar projects, with amendments to match the First Cobalt
Refinery flowsheet. Annual operating costs under the 24 tpd base
case scenario were estimated at US$6.8M per year (see Table 3).
The costs presented in the report are a factored estimate,
designated as an FEL 1 and AACE Class 5 (order of magnitude)
estimate with an indicative accuracy range of -30%/+50%, and are
based on previous historical data metrics from similar projects.
Costs are typically based on first principles but as feed
characteristics are undecided at this time, the operating costs
provided in Table 3 are indicative only.
Table 3. Operating
cost estimates (3q18, -30%/+50%)
|
COST
ITEM
|
ANNUAL COST
(US$)
|
24 TPD
(Base Case)
|
Sulphuric
acid
|
126,144
|
Lime
|
331,128
|
Sodium
Hydroxide
|
118,260
|
General
Reagents/Consumables
|
462,758
|
SX
reagents
|
262,636
|
Water and water
treatment
|
61,183
|
Assay/Laboratory
consumables
|
96,251
|
Grid power
|
740,151
|
Natural
Gas
|
77,000
|
Labour
|
1,383,283
|
General
expenses
|
1,685,052
|
Maintenance
Materials
|
1,112,590
|
Contract
Services
|
288,752
|
Total
|
6,745,188
|
For purposes of Primero's baseline study, it was assumed that
North American arsenic-rich feed stock would be used to produce a
cobalt carbonate product. However, as First Cobalt is now
considering cobalt hydroxide feed for the production of battery
grade cobalt sulfate, the flowsheet would be modified to include a
cobalt crystallization circuit at an additional capital cost
estimate of US$2.5 million. The base
case operating scenario in the Primero study and the modified
operating scenario anticipated with a cobalt hydroxide feed is
outlined in Table 4.
Table 4. Operating
Scenarios at 24 tpd1
|
|
|
|
Cobalt
Concentrate
(Primero Base
Case)
|
Cobalt
Hydroxide2
(30% cobalt
grade)
|
FEED
PROCESSED
|
|
TONNES
|
8,760
|
8,760
|
HEAD
GRADES
|
CO
|
%
|
15.0
|
30
|
|
NI
|
%
|
10.5
|
-
|
AVAILABILITY
|
|
%
|
90
|
90
|
RECOVERIES
|
CO
|
%
|
90
|
90
|
|
NI
|
%
|
90
|
-
|
PRODUCTION
|
CO
|
TONNES
|
1,064
|
2,129
|
|
NI
|
TONNES
|
745
|
-
|
|
1 Concentrate metal content
fed into the First Cobalt Refinery will vary dependent upon feed
source. A range of potential production rates for each option is
provided. A mass pull to concentrate of 6% has been
assumed.
|
2 The cobalt
hydroxide scenario has been modelled by swapping out concentrate
for hydroxide on a tonne-for-tonne basis. The company has not
completed any detailed engineering studies at this
time.
|
The Company engaged a third party permitting and environmental
consultant to review the state of current permits and timeline for
a restart. The review found that the Refinery would require a new
permit to take water but that all other major permits are in place.
Subject to certain modifications and amendments, it is believed
that an 18 to 24-month period would be sufficient to renew and
amend all necessary permits to restart the refinery. An order of
magnitude cost estimate for the approval process is estimated at
approximately $1 million.
With respect to existing tailings capacity, it was noted that
the autoclave pond has not been fully constructed and has an
estimated 40,000 m3
(approximately 70,000 tonnes assuming a specific gravity of 1.74
tonnes per cubic metre) of remaining permitted capacity yet to be
constructed. Operating at 24 tpd, the autoclave pond would reach
capacity after eight years. Thereafter, the Company could avail
itself of 80 acres to the north of the Refinery for additional
tailings storage capacity. The primary settling pond is also not
yet constructed to its full capacity and it was noted that doing so
would improve discharge water quality through additional retention
time and increased capacity for water storage.
First Cobalt also engaged a leading cobalt market research
company to advise the Company on (1) indicative commercial terms
for a variety of feedstock options for the refinery, and (2)
potential offtake terms for cobalt products after the refining
process is completed. The report identified three primary sources
of potential feedstock and highlighted the high quantities of
ethically-sourced cobalt hydroxide material. The study considered
offtake markets for final product as the refinery could produce a
cobalt sulfate for the battery market or it could produce cobalt
metal for the aerospace, military and industrial sectors. Current
indications are that pricing for cobalt sulfate is generally in
line with cobalt metal.
Detailed Test Results – Cobalt Sulfate
The first stage of metallurgical testing was intended to
determine leach characteristics of the hydroxide sample and to
closely track deleterious elements. The cobalt hydroxide sample
graded 23.2% Co, 3.45% Mg, 3.27% Mn, 2.4% Fe, 1.6% Cu and 1% Si,
while all other deleterious elements graded significantly less than
1% each. The sample leached well, easily leaching 98% of cobalt
from the cobalt hydroxide under atmospheric conditions.
The second stage of testing aimed to improve the quality of the
leach liquor through the removal of deleterious elements using an
impurity SX step. Work primarily focused on reducing Mn, Mg, Ca,
and Zn while preserving Co.
The third stage of testing involved cobalt SX and, as expected,
higher cobalt loadings were achieved at higher pH levels, with 96%
of the cobalt being loaded in a single contact at pH 5.5 and
achieving a concentration of ~7 g/L. The organic was then scrubbed
to remove deleterious elements that were co-loaded on the organic
along with the cobalt. The scrub tests successfully removed
approximately 90% of the loaded Mg in a single pass.
Once scrubbed, the organic was stripped of cobalt with
H2SO4 until stable, at approximately pH
2.55-2.75. Copper in the strip liquor was addressed through ion
exchange using XUS 43578, an ion exchange resin, which reduced Cu
in the liquor to less than 0.2 mg/L. Finally, Mn was further
reduced through Caro's acid precipitation. Mn in the liquor dropped
from 136 mg/L to 3.69 mg/L effectively removing ~97% of the Mn in
the very first round.
Finally, the remaining strip liquor was boiled down and cooled
to allow cobalt sulfate heptahydrate crystals to form.
All tests were done as single batches providing ample room for
optimization of operating parameters and process improvements as
would be experienced in a continuous operation like the First
Cobalt Refinery.
Qualified and Competent Person Statement
Peter Campbell, P.Eng., is the
Qualified Person as defined by National Instrument 43-101 who has
reviewed and approved the contents of this news release. Mr.
Campbell is also a Competent Person (as defined in the JORC Code,
2012 edition) who is a practicing member of the Professional
Engineers of Ontario (being a
'Recognised Professional Organisation' for the purposes of the ASX
Listing Rules). Mr. Campbell is employed on a full-time basis as
Vice President, Business Development for First Cobalt. He has
sufficient experience relevant to the activity being undertaken to
qualify as a Competent Person as defined in the JORC Code. The term
"Competent Person" is not recognised by Canadian securities
regulatory authorities, and the term is used by the Company with
reference to the JORC Code, and to ensure compliance with the ASX
Listing Rules and applicable reporting requirements in Australia.
About First Cobalt
First Cobalt is a Canadian-based pure-play cobalt company and
owner of the only permitted primary cobalt refinery in North America. The Company is studying a
restart of the First Cobalt Refinery in Ontario, Canada, which could produce 2,000
tonnes of cobalt sulfate or metallic cobalt per year. First
Cobalt's main cobalt project is the Iron Creek Cobalt Project in
Idaho, USA, which has Inferred
mineral resources of 26.9 million tonnes grading 0.11% cobalt
equivalent, or an alternative underground-only scenario of 4.4
million tonnes grading 0.3% cobalt equivalent.
On behalf of First Cobalt Corp.
Trent Mell
President & Chief Executive Officer
Neither 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 Estimates of
Resources
Readers are cautioned that mineral resources are not economic
mineral reserves and that the economic viability of resources that
are not mineral reserves has not been demonstrated. The estimate of
mineral resources may be materially affected by geology,
environmental, permitting, legal, title, socio-political, marketing
or other relevant issues. The mineral resource estimate is
classified in accordance with the Canadian Institute of Mining,
Metallurgy and Petroleum's "2014 CIM Definition Standards on
Mineral Resources and Mineral Reserves" incorporated by reference
into NI 43-101. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or pre-feasibility
studies or economic studies except for Preliminary Economic
Assessment as defined under NI 43-101. Readers are cautioned not to
assume that further work on the stated resources will lead to
mineral reserves that can be mined economically. An Inferred
Mineral Resource as defined by the CIM Standing Committee is "that
part of a Mineral Resource for which quantity and grade or quality
are estimated on the basis of limited geological evidence and
sampling. Geological evidence is sufficient to imply but not verify
geological and grade or quality continuity. An Inferred Mineral
Resource has a lower level of confidence than that applying to an
Indicated Mineral Resource and must not be converted to a Mineral
Reserve. It is reasonably expected that the majority of Inferred
Mineral Resources could be upgraded to Indicated Mineral Resources
with continued exploration."
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 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.