Canada Cobalt Works CEO Frank Basa joined the Investing News Network to explain his company’s proprietary Re-2OX process.
Canada Cobalt Works is a Canadian resource and exploration company developing a past-producing cobalt-silver mine in Northern Ontario. The Castle mine property is comprised of 19 claims, 34 leases and two licenses of occupation totalling 2,815 hectares. With underground access at the Castle mine, Canada Cobalt Works intends to leverage its hydrometallurgical process in order to recover both technical-grade cobalt sulfate and nickel–manganese-cobalt formulations.
Canada Cobalt Works is aiming to solve the problems facing the global cobalt supply chain by continuing to develop its Re-2OX process. Cobalt is an essential element for lithium-ion batteries; however, much of the world’s supply cannot be recovered using ethical means. The Re-2OX process has the potential to unlock new supplies of cobalt in more reliable mining jurisdictions around the world, alleviating the demand for unethically sourced cobalt from areas like the Democratic Republic of Congo (DRC).
Below is a transcript of our interview with Canada Cobalt Works CEO Frank Basa. It has been edited for clarity and brevity.
Investing News Network: Give me a little history of the company. I think people are going to want to know that before we start talking about what it is you’re doing, because what you’re doing is so fascinating.
FB: What we’re really about is taking what we call a distressed asset, which is the Castle mine, a former high-grade silver-cobalt producer, and we take another distressed asset and we put them together, fund it, and develop the asset. In this case, we’re going a little further than just a simple exploration company. We’re trying to become a producer and we have the ability to produce the product that the battery market is looking for.
INN: And cobalt from Canada?
FB: That’s right. That’s why it’s called Canada Cobalt Works and it works in Canada.
INN: When we take a look at the global market on cobalt, so much of it comes from Africa, and there are people who have issues with the way in which that jurisdiction manages itself with child labor. So when we bring Canadian standards into this, it increases the value of the product from an end-user perspective.
FB: You’re right about that. We went to Asia, we actually met with people in the automotive industry in Japan, and one of the main criteria they asked us was “where’s your cobalt come from and how was it produced?” It has to be an environmentally green process to produce cobalt.
INN: So how do you assure people that what you’re doing is an environmentally sound structure and process?
FB: Well what we do is we actually invite them to come and see us, and to see the mines on location in Northern Ontario. Of course, the work has been done by SGS. SGS is a global group in Lakefield. Everything’s being done in Canada, so they’re very comfortable with that.
INN: Wow. So Castle mine. What’s the status of that site right now?
FB: I was a metallurgical engineer for six years when I was there, and it was our highest-grade mine in silver and cobalt. The market collapsed, so all the mines got shut down and then the president of the company passed away and the new management let it go, so we picked it up for $50,000.
INN: Excuse me?
FB: Yeah, it was $50,000. I could have used my credit card to buy it. Of course, this was very advanced — it had three shafts — but the critical thing was to be able to access the underground to really develop any assets in the Cobalt Camp.
Once you’re underground you’ll see it’s kind of easy to find. When the cobalt oxidizes it turns pink, so if you see pink in the vein, that’s usually half a percent, 1 percent or higher. If you look at our results, you’ll notice very rarely is it below 1 percent, usually it’s 2 percent or even double digits. And, of course, there’s still a lot of silver. So that camp was actually called a cobalt camp, the town itself is called Cobalt, but they mined cobalt veins and when I was there they only recovered the silver and threw the cobalt away.
INN: They threw it away because they had no idea what its future use was.
FB: They just threw it away. So I showed up. I was fairly young and I thought I was pretty smart, which I wasn’t. I know as you get older, you get smarter. So we went and dug it up out of the bush. What they threw away in cobalt was worth $52 million.
INN: You dug up what they threw away.
FB: Well, I had the company dig it up. We bought a building and pushed it all in with a bulldozer. Then we developed a process to separate it. At that time, we were going to make what we call a cobalt carbonate from cattle feed. Then the price of silver collapsed, everything went out the door and a lot of the assets were let go. Fortunately for us, we picked it up. So we’ve had great success at the Castle mine. We were one of the first in the camp to be underground, and one of the first to drill underground. We’ve taken bulk samples from underground, and we’ve actually produced cobalt sulfate for the battery market using our process called a Re-2OX process.
Now we’re actually looking at producing a product that would target clients’ specific needs. Originally we were just going to produce cobalt sulfate, and now they’re looking for nickel sulfate from us, even manganese sulfate. So it’s kind of three products they want from us now. So we’re moving in that direction. At the same time, we’re doing exploration and going through the permitting process to put a 610-ton-per-day mill on the property. Hopefully, in two years time, we’ll be at a stage where we might be able to produce a product for the end user.
INN: Two years?
FB: We’re targeting that.
INN: Wow, and you’re already working on shoring up some of those supply agreements.
FB: Yeah, let’s just say there are more buyers than sellers and they’ve been very nice to us. I mean, very, very, very supportive to the point that they’re interested in financing us. They want to secure supply that is conflict free.
INN: Right. So you talked about your processes, this hydrometallurgical process. Tell us about it because you have developed it and it becomes proprietary technology for you which gives you another advantage, doesn’t it?
FB: The process was designed out of necessity. A lot of the stuff globally, including our ore, has a lot of arsenic that the smelters can’t take, so we developed a process that removes the arsenic. We wanted to show the world we can do something really tough, so we created a concentrate that had 50 percent arsenic in it, then we subjected it to this Re-2OX process and sure enough, all the arsenic came out and all the cobalt came up. So we produced this cobalt sulfate, and at that time they wanted 21 percent cobalt grade and cobalt sulfate. We produced it at 22.6 percent, so we exceeded the criteria. Immediately, when the potential buyer saw that last year in November, they said “okay, now we need nickel and manganese.” I said “okay, we’ll work on it.” So we’re showing the world that we can do it before we even have a resource.
INN: So if that were your entire story, I’d say that’s pretty good, but it’s not. You’re also mining used computers and cell phones because of this process that you have.
FB: We tried it. We talked with the automotive sector in Japan and they all came to us because they don’t want cobalt recovered from the lithium-ion batteries to go through a smelter. They don’t want you to burn it. They want to be ethical and environmentally friendly, putting nothing back into the air. Our door is still open to these people, but what they’re looking for is such a large-scale facility it’s still hard to comprehend what they want out of us.
They’re projecting the future and what they’re projecting is unbelievable. They come back with these lives on the batteries which are seven years or 14 years depending on the battery, but the reason they’re doing this is there’s not enough cobalt. They’re actually changing the cobalt formulation in the batteries, lowering the cobalt level and replacing it with nickel and manganese. Even the ones coming out of the DRC can’t supply enough cobalt.
INN: Let’s talk about why cobalt and lithium-ion batteries are such an important combination because we know when the cobalt is not there we’ve got a potentially explosive environment.
FB: Yeah it harms it. When you lower the cobalt level in a lithium-ion battery, it becomes unstable and starts on fire, so there’s a certain level they have to have regardless. You can’t just pull it out.
INN: Well there had been a hope that they could do that, and they quickly realized we can’t do that, because we’ve got phones and computers catching on fire.
FB: We spoke to the people in the automotive sector when we were in Japan and basically they said if you take the cobalt out, it’s unstable. The other thing is if you lower the cobalt level you have less range.
INN: And cobalt becomes that essential element.
FB: They can’t replace it. Now they replace it with nickel and manganese and a few other formulations, but it comes to this: unless you have a certain amount of cobalt, it just doesn’t work. A new battery would take 15 to 20 years to commercialize. So that’s why the lithium-ion battery won’t go away.
INN: And neither will the requirement for cobalt?
FB: No. Right now, there’s a critical shortage. People are not aware of it. Everybody thinks there’s a lot of cobalt but there isn’t.
INN: So there’s a tremendous amount of interest. From an investor’s perspective, what am I buying into now? What is that going to look like in a year or two from now?
FB: Well I think we’re looking at a two-year window. We’re doing a lot of things; we’re very dynamic and keep changing our direction. Originally we were supposed to just drill and explore a resource. After we went to Asia, we said we think we have to change the structure, and at that time we also changed the name to Canada Cobalt Works.
INN: Canada works as well in China. I know it’s a valued name.
FB: It really changed everything, the stock went to 91 cents. We changed the name and we changed direction. So we said we’ll explore, we’ll go underground, we’ll produce product to show the world that the process works and we’ll begin the permitting process for the mill. In Canada, first you have to do all of these studies, which can take a year. Then it can take another year to get your permit, so it’s two years. What we’re trying to do is take those two years of permitting and put it all together. The drilling, the test work, the evaluation, the product development, everything’s done all at the same time so we can squeeze that into a two-year time frame.
INN: Wow. So will you come back and give us an update maybe next year or the year after?
FB: Oh yeah, we will.
INN: It’s a very interesting position that you’re in and the technology that you’ve developed, which I think is fundamentally important because it meets the environmental requirements that not only Canada but your customers are ultimately going to want.
FB: It’s social requirements. The social license, they call it.
INN: That’s exactly what it is. You’re sitting in a very interesting position. Thanks for coming in and sharing this with us.
FB: Yeah. You’re welcome. Thank you very much.
INN: Thank you.
This interview is sponsored by Canada Cobalt Works (TSXV:CCW). This interview provides information which was sourced by the Investing News Network (INN) and approved by Canada Cobalt Works, in order to help investors learn more about the company. Canada Cobalt Works is a client of INN. The company’s campaign fees pay for INN to create and update this interview.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Canada Cobalt Works and seek advice from a qualified investment advisor.
This interview may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, receipt of property titles, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The issuer relies upon litigation protection for forward-looking statements. Investing in companies comes with uncertainties as market values can fluctuate.