TORONTO, May 28, 2019 /CNW/ - First Cobalt Corp.
(TSX-V: FCC, ASX: FCC, OTCQX: FTSSF) (the "Company") is pleased to
announce that a scoping study for the restart of the First Cobalt
Refinery in Canada using third
party cobalt hydroxide as feed material concluded that annual
production could reach over 5,000 tonnes per annum ("tpa") of
cobalt, more than twice the previous estimate. By eliminating the
Refinery's autoclave circuit and addressing production constraints,
the debottlenecking study by Ausenco Engineering Canada Inc.
estimated the incremental capital cost to double production
capacity will be $7.5 million from
the previous estimate or $37.5
million in total.
All numbers are in US dollars. A final decision on whether to
put the First Cobalt Refinery back into production has not been
made at this time and is contingent on the outcome of ongoing
discussions and studies. The Company has not completed a
feasibility level study of the economic viability of operating the
Refinery. Any decision to restart the Refinery will be based on a
supply of third party feed material and not the anticipated
development of any of the Company's current mineral
projects.
Highlights
- Ausenco defined the production capacity, capital costs and
operating costs associated with recommissioning the Refinery in
Ontario, Canada using third party
cobalt hydroxide as the primary feed material to produce a battery
grade cobalt sulfate
- Study outlines potential to double production to over 5,000 tpa
of cobalt by increasing the initial capital investment from
$30 million to $37.5 million and expanding the flow sheet
circuit to optimize the existing building footprint
- Discussions continue with Glencore and other third parties on
definitive commercial terms for feed supply and financing to
restart the First Cobalt Refinery within 18 to 24 months
Trent Mell, President & Chief
Executive Officer of First Cobalt, commented:
"The First Cobalt Refinery is a strategic North American
asset and producing cobalt materials for the North American market
is our quickest path to cash flow. The facility is in excellent
condition with permits in place, good community support and a short
timeline to potential production.
The ability of the First Cobalt Refinery to produce 5,000
tonnes per annum in a global cobalt market that totaled
approximately 130,000 tonnes in 2018, would be an important
contribution to the global supply chain, particularly the
U.S. market."
First Cobalt engaged Ausenco to
complete a scoping-level study in support of restarting the
refinery, located near Cobalt,
Ontario. The debottlenecking study assessed the production
capacity of the refinery and associated constraints assuming that
cobalt hydroxide would be the primary source of feed material for
the production of cobalt sulphate. Previous studies assumed that
the refinery would treat lower grade arsenic-rich concentrate
material.
The report outlined three restart scenarios, each assuming that
the refinery would primarily treat cobalt hydroxide grading
approximately 30% cobalt. In all scenarios, the Refinery's
autoclave circuit is not required thereby eliminating the first
constraint to higher production rates. The first scenario (Case 0)
assumed minimal capital investment outside refurbishing existing
equipment. The next scenario (Case 1) assumed an additional capital
investment to alleviate the bottleneck in the current solvent
extraction (SX) circuit. The final scenario added an additional
capital investment to alleviate the liquid-solid separation
limitations of the currently installed equipment. Details of the
three scenarios are summarized in Table 1.
Table 1. Potential production scenarios (Numbers in
US$)
|
DESCRIPTION
|
PRODUCTION
(TPA*)
|
CAPITAL
COST (with contingency)
|
OPERATING
COST (annual)
|
Case 0
|
Using currently
installed equipment, flowsheet changed to process cobalt hydroxide
feed. Production limited by the capacity of the currently installed
SX circuit.
|
675
|
$12.0M
|
$9.3M
|
Case 1
|
Using an expanded SX
circuit, production is limited by capacity of the currently
installed liquid-solid separation equipment
|
1,964
|
$18.4M
|
$17.4M
|
Case 2
|
Using additional
liquid-solid separation equipment, production limited by filtration
capacity and the size of the existing building
|
5,020
|
$37.5M
|
$36.4M
|
*
|
Tonnes per annum
of cobalt in cobalt sulfate
|
Today's results further support the business case to restart the
First Cobalt Refinery as it could be expanded from its previously
anticipated production potential of 2,000-2,500 tpa to over 5,000
tpa of cobalt in sulfate.
While the 675 tpa production scenario offers a minimum
investment case, based on the minimal increase in capital
requirements from the 2018 Primero study, First Cobalt intends to
explore the potential to increase production to 5,000 tpa of cobalt
contained in sulfate. The capital requirements presented here
include contingencies of $3.02
million, 4.61 million and 10.39 million for cases 0, 1 and 2
respectively. Capital estimates are provided with an indicative
accuracy range of -30%/+50% and are based on previous historical
data metrics from similar projects.
The 675 tpa production scenario involves simply restarting the
refinery "as is" using only currently installed equipment and
making necessary flowsheet changes to process cobalt hydroxide to
produce cobalt sulfate. In this scenario, production of cobalt
sulfate is limited by the capacity of the currently installed
solvent extraction ("SX") circuit.
Building on the 675 tpa scenario, the 1,950 tpa scenario
includes the additional capital to overcome the limitation imposed
by the current SX circuit. Under this operating scenario,
production of cobalt sulfate is limited by the capacity of the
currently installed liquid-solid separation equipment.
The preferred 5,000 tpa scenario then builds on both lower
production rate scenarios and includes additional capital to
overcome the limitation imposed by the liquid-solid separation
equipment. Under this operating scenario, production of cobalt
sulfate is limited by filtration capacity and the size of the
existing building.
The study completed by Ausenco does not access the economic
viability of operating the Refinery, and instead estimates the
costs associated with recommissioning and operating the Refinery
under the above scenarios.
Next Steps
First Cobalt recently announced
a memorandum of understanding ("MoU") with Glencore AG to supply
cobalt feedstock and financing to recommission the facility
(May 21, 2019 press release).
Discussions are ongoing and the parties have agreed to a 60-day
timeline to negotiate definitive agreements.
The First Cobalt Refinery project team is continuing to work
with engineering firms, process experts and financial advisers to
finalize a business plan to restart the facility. Next steps
include advanced metallurgical testing to demonstrate that the
flowsheet will achieve the desired product specifications.
Feasibility level engineering and test work will be required to
support the design of new equipment, specifically solvent
extraction and liquid-solid separation, and to generate detailed
quotations, engineering and further cost estimates.
About the First Cobalt Refinery
The First Cobalt Refinery is a hydrometallurgical
cobalt-silver-nickel refinery in the Canadian Cobalt Camp,
approximately 600 kilometres from the US border. The facility was
commissioned in 1996 and currently has a nominal throughput of 12
to 24 tpd. The Refinery historically treated mine concentrates and
is permitted to treat feed with high arsenic content. The current
footprint includes an empty feed warehouse that once housed a mill.
The facility is located on a 40-acre property that can be expanded
to 120 acres with two settling ponds and an autoclave pond (Figure
2).
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 of operation. Thereafter, the Company
could avail itself of 80 acres to the north of the Refinery (Figure
3) to permit 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.
Previous Studies
In 2018, First Cobalt completed three studies to assess options
for a restart of the facility: (1) a desktop engineering review of
the current flowsheet and associated capital and operating costs to
treat arsenic-rich mine concentrates at a throughput rate of 12 to
50 tpd; (2) a permit review to assess the time required to renew
and amend existing operating permits; and (3) a market study to
identify potential feed sources and final products and estimate
gross margin opportunities (see October 10,
2018 press release).
Subsequent studies by SGS to test the suitability of cobalt
hydroxide as feedstock and using the processes in the current
refinery flowsheet the Refinery flowsheet is capable of producing a
high purity, battery grade cobalt sulfate from cobalt hydroxide
(see November 8, 2018 and
April 3, 2019 press
releases)
For purposes of this earlier baseline engineering study, Primero
Group assumed that the Refinery would continue to treat mine
concentrates, that the flowsheet would remain unchanged and that
the final product would be cobalt carbonate. However, with the
decision to treat third party cobalt hydroxide material, Ausenco
was retained to prepare a new scoping level assessment under a
modified flowsheet.
As part of the engineering review, Primero Group estimated the
replacement (or new build) value of the refinery building at the
various throughput rates. In 2012, Hatch estimated the replacement
cost of the Refinery at $78M.
Primero's results from the current study range from $53M to $143M,
inclusive of a 30% contingency. In instances, replacement cost
estimates were limited to the refinery building and did not include
replacement costs of 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.
Corporate Update
The Company has engaged Catch Advisory Group ("Catch") to
conduct investor relations activities on its behalf. Catch will be
paid in cash based on a prescribed hourly rate which is expected to
approximate $5,000 per month.
Catch currently does not hold any securities of First Cobalt and
have no immediate intention of acquiring any of the Company's
securities in the foreseeable future.
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 exploring a restart of the First Cobalt Refinery in
Ontario, Canada, which could
produce over 5,000 tonnes of contained cobalt in sulfate per
year. First Cobalt's main cobalt development project is the
Iron Creek Cobalt Project in Idaho,
USA, which has an inferred mineral resource estimate
available on the Company's website. The mineral resource
delineated on the Iron Creek Cobalt Project is not expected to
provide a source of feed for the First Cobalt Refinery.
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 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.