Vertically-Integrated Solution for Cobalt Production in North America
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First Cobalt Corp. (TSXV:FCC, OTCQX:FTSSF, ASX:FCC) is a vertically-integrated cobalt exploration and development company with 3 significant assets located in Idaho, US and Ontario, Canada. The company is focused on supplying battery-grade cobalt for the rapidly growing electric vehicle (EV) market.
First Cobalt’s Iron Creek project, which covers 727-hectares in the Idaho Cobalt Belt, is one of the few cobalt projects in the US potentially nearing production over the next five years. The Iron Creek property has significant infrastructure in place including three underground adits that total 600-meters. First Cobalt recently released a maiden resource estimate for the property that outlined an inferred resource of 45 million pounds of cobalt and 175 million pounds of copper for 62.9 million pounds of cobalt equivalent.
Ontario, Canada is home to the First Cobalt Refinery, the only fully-permitted hydrometallurgical cobalt-silver-nickel refinery in North America capable of producing battery materials, as well as their extensive exploration project known as the Greater Cobalt project. The First Cobalt Refinery was commissioned in 1996 to process cobalt and other materials produced by the historic mines in the area and last operated in 2015. First Cobalt is currently conducting a study that will help determine the capital needed to restart the facility and to potentially expand the current operations.
The refinery also offers early cash flow opportunities. The facility is able to process third party mine material, mill and refinery residue material, historic muckpile material from the over 100 historic mines in the area, as well as recycled battery materials once the refinery is fully-operational.
First Cobalt’s Greater Cobalt project was consolidated through various acquisitions and currently encompasses more than 10,000-hectares of land near Cobalt, Ontario. The property has been split into three sections: Cobalt North, Cobalt Central and Cobalt South. First Cobalt’s 2018 exploration program focused on areas with known historical exploration for cobalt and silver from these three sections, though there is a lot of land that remains unexplored.
First Cobalt’s management team is comprised of individuals that have experience in building and operating large mining companies and in raising capital for their projects. The team has been busy over the past year completing three acquisitions: US Cobalt, CobalTech and Cobalt One to create one of the largest pure-play cobalt exploration companies in North America. First Cobalt is also embraces innovation and has partnered with numerous local organizations and universities to help advance their projects.
- Vertically-integrated and well-situated to provide battery-grade cobalt for the EV market.
- Maiden resource estimate for Iron Creek contains 45 million pounds of cobalt, 175 million pounds of copper for 62.9 million pounds of cobalt equivalent.
- First Cobalt owns the only fully-permitted hydrometallurgical cobalt-silver-nickel refinery in North America.
- Refinery provides early cash flow opportunities.
- Over 10,000 hectares of land to explore in Ontario at the Greater Cobalt project.
- Management has over 100 years of combined experience in mining and capital markets experience.
The Cobalt Market
Cobalt has been declared as a critical metal by the US Department of the Interior due to its rising demand in the EV sector. Global EV sales are expected to increase from 1.6 million in 2018 to approximately 2 million in 2019, which will result in increased demand for cobalt as it is a integral component in lithium-ion batteries. However, it is likely that the cobalt supply will be unable to keep up with growing demand. Approximately 60 percent of the world’s cobalt supply is located in the politically-unstable Democratic Republic of Congo, which can cause concerns for the EV sector as more end-users are looking for ethically-sourced cobalt.
Many companies are looking for politically-stable jurisdictions to fulfill the increased demand for cobalt. Mining companies such as First Cobalt are re-examining areas that have undergone previous exploration in North America, including Idaho and Ontario. North America is also home to the Tesla (NASDAQ:TSLA) gigafactory, the Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL) headquarters and various car manufacturers, making it an ideal place for cobalt mining operations to establish themselves.
Iron Creek Project
In September 2018, First Cobalt obtained a 100 percent interest in the Iron Creek cobalt property in Lemhi County, Idaho, which is home to the prolific Idaho Cobalt Belt. The property has significant infrastructure already in place, including an underground development that consists of 600-meters of drifting from three adits, and is accessible by an all-weather road that connects to Highway 93.
A substantial amount of historical exploration has been conducted on the property, including approximately 30,000-feet of diamond drilling and 1,500-feet of underground mining.
In 2017, a previous operator completed a 40-hole drill program on the property and determined that the mineralization is open to the west and east, as well as down-dip and traced the mineralization for over 800-meters. Additionally, their assay results confirmed the historic mineralization and suggests that broader zones of cobalt mineralization are also present.
First Cobalt’s 2018 work program was designed to prepare for the company’s updated resource estimate. The company has set aside $9 million to complete the program, which will be comprised of a 30,000-meter drill program that will include both infill drilling to convert a portion of the inferred resource into the measured and indicated category and extensional drilling to support a second resource estimate to be released early next year.
The company has identified two zones of mineralization, the No Name and Waite Zones, which are roughly parallel and dip roughly 75° to the north, remaining open at depth. Additional mineralization has been encountered during drilling and some holes in the 2018 program are intended to confirm the potential for additional mineralized zones beyond No Name and Waite. The No Name Zone and the Waite Zone have true widths between 10m and 30m. Mineralization also occurs between the No Name and Waite Zones as 1 to 5m pods.
First Cobalt was able to extend the cobalt mineralization at the Waite Zone by 50-meters to the west and to the surface for a total strike length of 520-meters. The company also recovered a high-grade intercept of 0.52 percent cobalt and 1.10 percent copper over 4.6 meters at the Waite zone. Further drilling identified more high-grade intercepts within broad zones of lower-grade cobalt-copper that could be suitable for bulk mining methods.
In September 2018, First Cobalt released their maiden resource estimate for the property. The report outlined an inferred resource of 26.9 million tonnes grading 0.11 percent cobalt equivalent, or 0.08 percent cobalt and 0.3 percent copper in a pit constrained base case scenario.
The resource is considered to be open along strike and at depth, with true widths between 10 and 30 meters. Preliminary metallurgical testing has shown that simple flotation methods are applicable with recoveries of 96 percent for cobalt and 95 percent for copper in rougher flotation.
“The initial resource estimate and the pace of progress at Iron Creek have exceeded our expectations,” said President and CEO Trent Mell. “We have delineated a sizeable primary cobalt deposit on patented property and mineralization continues to expand to the east, west and at depth. The mineralogy is simple and initial metallurgical test work is very encouraging with high metal recoveries. Cobalt is associated with pyrite rather than minerals containing arsenic, which may offer processing and offtake advantages.”
Currently, First Cobalt is in the process of completing their 2018 work program which includes over 29,000-meters of drilling to expand the known mineralized areas on the property and infill. They will be testing the open strike length of the No Name and Waite zones and will be conducting metallurgical work to determine the recovery rates for cobalt.
First Cobalt Refinery
The First Cobalt Refinery is the only permitted hydrometallurgical cobalt-silver-nickel refinery in North America capable of producing battery materials and is located approximately five kilometres east of Cobalt, Ontario. The facility rests on 40-acres of land, which can be expanded to 120-acres, and includes two settling ponds and an autoclave pond. The facility was commissioned in 1996 and last operated in 2015.
The facility is fully permitted to process feed containing elevated concentrations of arsenic, which is commonly found alongside cobalt in material throughout North America. The refineries ability to process material containing elevated arsenic levels while producing cobalt battery materials could derisk multiple North American cobalt projects.
The refinery hosts three circuits: a pressure oxidation circuit, a solvent extraction circuit and a Merrill Crowe circuit. When refining feeding contains arsenic, the material is initially treated in the pressure oxidation circuit, where the arsenic is combined with iron to create scorodite. The stable scorodite can then be disposed of in the autoclave pond.
In 2012, a report prepared for a previous owner estimated that the replacement value for the existing facility at US$78 million. The estimate did not include the additional capital that would be needed to install power lines and the work needed for the tailings facility and roads.
The facility has been on care and maintenance since 2015. In April 2018, First Cobalt announced its plans to complete a study that would estimate the capital required to restart the facility in its current state and under an expansion scenario. The expansion scenario study will estimate the additional capital requirements and includes an increase in processing capabilities.
Cash flow opportunities
The refinery is well situated with access to road systems, railway lines and power. Restarting the refinery would give First Cobalt the opportunity to generate a steady supply of revenue as they continue to move their Iron Creek and Greater Cobalt projects forward. The refinery will be able to process third party mine and recycle feed material, mill and refinery residue material and historic muck piles from the 50 historic mines in the area.
First Cobalt has been assessing several muck piles and higher grade stockpile material at the refinery to determine the grades in the area and to test various ore sorting technologies.
Greater Cobalt Project
The Greater Cobalt project is an assembled land package that First Cobalt has been working on since 2017. The project encompasses over 10,000 hectares of land, which First Cobalt will be exploring. To date, the project has undergone a maiden drill program of 7,000-metres in 2017, which targeted several areas known to be rich in cobalt over the two kilometer strike length of the Keeley-Frontier vein system, which includes Haileybury and Bellellen. The 2018 drill program includes an additional 13,500-metres of drilling throughout the camp. The property is divided into three exploration regions: Cobalt North, Cobalt Central and Cobalt South.
The 2017 drill program conducted by First Cobalt returned results that indicated significant variation in geological settings in the area may host cobalt mineralization. The program also tested for near-surface mineralization potential in several prospective areas to determine if cobalt grades were sufficient enough for follow-up exploration.
First Cobalt’s 2018 drill program was designed to test mineralized areas throughout the cobalt camp with known historical production of cobalt and silver. These areas include the Kerr, Drummond, Juno, Ophir, Hamilton, Silver Banner and Silverfields mines in Cobalt North, the Caswell mine in Cobalt Central, and the Bellellen, Keeley and Frontier mines in Cobalt South.
In the 1980s and 1990s, exploration work was primarily focused on finding copper, zinc and lead mineralizations. The historic mines in the area have accounted for approximately 80 percent of the silver produced.
Extensive exploration work still needs to be completed, as cobalt has not been assayed in the area until First Cobalt started exploring for the mineral. First Cobalt’s properties in the Cobalt North area include the past-producing Drummond, Kerr, Silver Banner, Juno, Silverfields, Hamilton, Ophir, Lawson and Conisil mines. Muckpile grab samples from the Juno and Drummond mines have returned grades of up to 3.9 percent cobalt, up to 1.63 percent zinc and up to 4,990 g/t silver.
Kerr Mine Area
The past producing Kerr mine has been of particular interest for the company. Exploration program results indicate that there is a trend of cobalt-silver mineralization that occurs in several close-spaced veins that have formed a network between Kerr and Drummond. The two dominate mineralizations in the area run northeast to southwest and north and south and that the mineralization occurs at or near surface.
A second target at Kerr has been identified approximately 400-meters south of the Kerr-Drummond mineralization with a strike length of over 350-meters. A geological interpretation of the target suggests that the mineralization is continuous based off of oriented core measurements and has developed along preferred rock units.
In November 2017, First Cobalt completed a prospecting program near the Caswell mine that returned elevated base metal values, including samples grading up to 9.44 percent cobalt, up to 1.27 percent copper and up to 2.92 percent nickel. The Caswell mine may be comprised of an enriched cobalt vein system similar to those found at other targets found on the property. However, silver was found in low quantities in all samples that were taken from the mine, which isn’t a bad thing. It makes the area an ideal target for soil and till geochemical surveys, ground geophysical surveys and drilling.
First Cobalt will be focusing 3,000 metres of its drill program for Cobalt South initially at the Bellellen mine, but the company also has planned to conduct follow up drilling at the Keeley and Frontier mines. Depending on the results of the drill program, First Cobalt will then focus an additional 2,000-meters of drilling in the Maiden Lake region later in 2018.
In 2017, sampling from Bellellen returned high grade cobalt values, which included grades of up to 3.76 percent cobalt. Historical records have shown that the Bellellen mine contained high cobalt content relative to silver.
Trent Mell — President & CEO
Trent Mell is a mining executive and capital markets professional with 20 years of operating and transactional experience. He began his mining career with Barrick Gold. He has also worked with nickel-cobalt producer Sherritt International, North American Palladium and AuRico Gold. Trent was President & CEO of Falco Resources, which acquired control over the historic Horne Mine Complex and 13 other former producers in the Rouyn Noranda Mining Camp.
More recently, Mell built a mining team for PearTree Securities to advise issuers and investors on Canadian exploration and development opportunities. In 2016, his team raised $300 million in equity investments and became the largest provider of flow-through capital to the Canadian resource industry.
Mell holds a B.A., a B.C.L. and LL.B. from McGill University (Montreal), an LL.M from Osgoode Hall (Toronto) as well as an MBA from Northwestern University (Chicago) and Schulich School of Business (Toronto).
Dr. Frank Santaguida, P.Geo. — VP Exploration
Frank Santaguida is a geoscientist with over 25 years of experience who has worked around the world on a wide range of base and precious metal ore deposits. His extensive experience in world-class base metal mining camps such as the Kidd Creek (Canada), Mt. Isa (Australia), the Central Lapland Greenstone Belt (Finland), and the African Copperbelt (Zambia-DRC).
Santaguida started his career with the Ontario Geological Survey before joining Falconbridge Limited where he held various positions in near-mine to regional grassroots exploration and in operating mines in Canada and Australia. He subsequently joined First Quantum Minerals Limited as Principal Geologist, where he was responsible for global exploration project generation and property evaluations for cobalt, copper, nickel and PGE properties. Notably, Frank was part of the team that discovered new resources at the Frontier Mine as well as new copper and cobalt prospects in the DRC.
Santguida has a Ph.D. from Carleton University and an M.Sc. from the University of Waterloo.
Peter Campbell, P.Eng. — VP Business Development
Peter Campbell is a professional engineer with 35 years of experience in mining operations, mineral exploration and capital markets. He spent much of his early career in northern Ontario, with more than 10 years working in Sudbury, including with the Ontario Ministry of Labour and an Associate Professorship with Laurentian University teaching Underground Mine Design. His experience as a mine builder brought him to Falconbridge Limited (now Glencore) where he spent over a decade working in senior engineering roles, culminating with Exploration Manager. As Exploration Manager, he was responsible for global exploration activities as well as prospect valuation and risk management.
Campbell moved into the capital markets in 2006 and earned a reputation as an astute mining analyst, eventually becoming Chairman of Jennings Capital, an independent Canadian broker-dealer. During his career a as an analyst, he developed a reputation for being the first to uncover hidden value – he was the first analyst to cover Probe Mines, Integra Gold, and Trelawney Mines, which was eventually sold to IAMGOLD for $350 million dollars, among other companies he covered. He was Chairman of Jennings Capital during their sale to Mackie Research in 2015.
Campbell has an Engineering degree from Queen’s University.
Kevin Ma, CPA — CFO
Kevin Ma is a Senior Financial Professional specializing in corporate financing, public company reporting and regulatory compliance in Canada and United States, as well as strategic planning, financial management, and capital markets. He started his career with Deloitte L.L.P. and more recently served as Chief Financial Officer for Gatekeeper Systems Inc., where he raised a significant amount of growth capital, and oversaw financial operations. He previously served as Director of Finance for Alexco Resource Corp., where he was core member of the senior team that put the Bellekeno silver mine into production in the historic Keno Hill Silver District.
Ma is a Chartered Accountant and has a Diploma in Accounting and a B.A. from the University of British Columbia.
Paul Matysek — Chairman
Paul Matysek is a corporate entrepreneur, professional geochemist and geologist with over 30 years of experience in the mining industry. He is currently the Executive Chairman of Lithium X Energy Corp. and has held senior executive and board positions with several natural resource exploration and development companies and is a proven company builder. Matysek was President and CEO of Goldrock Mines Corp., which sold to Fortuna Silver Mines in July 2016. He was previously CEO of Lithium One, which merged with Galaxy Resources of Australia to create an integrated lithium company. He served as CEO of Potash One, which was acquired by K+S Ag for $434 million in a friendly takeover in 2011. He was also the founder and CEO of Energy Metals Corporation, a uranium company that grew from a market capitalization of $10 million to approximately $1.8 billion when sold in 2007.
Henrik Fisker — Director
Henrik Fisker is the Chairman and CEO of Fisker Inc. Through his career in the automotive sector, Fisker has become synonymous with iconic cars and leadership in premium electric vehicle development. Mr. Fisker’s vision is behind some of the most emotionally appealing vehicles ever created, including the BMW Z8, the Aston Martin DB9/V8 Vantage, VLF Force 1 to the Fisker Karma and more. Henrik and Fisker Inc. are currently working towards developing the next generation of electric vehicle expertise, tomorrow’s technology and compelling design for the advancement of human mobility and comfort.
Garett Macdonald — Director
Garett Macdonald is a mining engineer with extensive experience in project development and mine operations with over 22 years of industry experience. He has managed large technical programs through the concept, feasibility and into construction stages and has senior management and board level experience with several public companies. Garett led JDS Energy & Mining’s Eastern Canadian business operations as Vice President of Project Development. He also held roles in mine operations and engineering with senior Canadian mining firms Teck Corporation, Placer Dome and Suncor Energy, as well as the Vice President of Operations for Rainy River Resources prior to $310M sale of Rainy River to New Gold Inc. in 2013.
Macdonald is currently the President & CEO of Tower Resources. He holds a Master of Business Administration degree from Western University’s Ivey Business School and a Bachelor of Engineering (Mining) from Laurentian University.
John Pollesel — Director
John Pollesel is currently Senior Vice President, Mining at Finning Canada and has 26 years of experience in mining. He previously served as Chief Operating Officer and Director of Base Metals Operations for Vale SA’s North Atlantic operations, where he was responsible for the largest underground mining and metallurgical operations in Canada. Prior to this, he was Vice President and General Manager for Vale’s Ontario operations. Pollesel also served as the Chief Financial Officer for Compania Minera Antamina in Peru, responsible for executive management in one of the largest copper/zinc mining and milling operations in the world.
Polesel holds an MBA from Laurentian University and is a CPA and CMA.
Jeff Swinoga, CA — Director
Jeff Swinoga is a Senior Executive with over 25 years of experience in the mining and public finance industries. He is currently the President & Chief Executive Officer of First Mining Gold and was previously the Chief Financial Officer of Torex Gold, where he led a $375 million project financing to build the $800 million ELG mine. His experience includes serving as Executive Vice President Finance & CFO of Golden Star Resources Ltd, Vice President Finance & CFO of North American Palladium, Vice President, Finance & CFO of HudBay Minerals Inc., and he was Director, Treasury Finance of Barrick Gold Corporation for seven years.
Swinoga previously served as a Director and Audit Committee Chairman of Tonbridge Power Inc. He is a Chartered Professional Accountant and holds an MBA from the University of Toronto and an Honours degree in Economics from the University of Western Ontario.
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