Battery Metals

Cobalt Investing

eCobalt Solutions says the project will produce an average of 2.4 million pounds of cobalt, 3.3 million pounds of copper and 3,000 ounces of gold annually.

eCobalt Solutions (TSX:ECS) has completed a feasibility study for its Idaho project, the company announced on Wednesday (September 27).
The study considers an underground mine with a target production rate of 800 short tons per day and weighted average annual production of 2.4 million pounds of cobalt, 3.3 million pounds of copper and 3,000 ounces of gold.
According to the report, the project will have an estimated mine life of 12.5 years and a preproduction period of 24 months utilizing a 0.25-percent cobalt cut-off grade. The economic model uses a corporate tax rate of 34 percent and a 7.5-percent discount rate, resulting in an after-tax NPV of $135.8 million and an IRR of 21.3 percent using an average base-case cobalt in cobalt sulfate price of $26.65 per pound. 

“Pre-construction activities are underway in preparation for project construction and mine development contingent upon successful project financing,” said Paul Farquharson, president and CEO of eCobalt.
The Idaho project is expected to produce cobalt chemicals for the battery market, as well as copper concentrate, copper sulfate, magnesium sulfate and gold as marketable by-products.
Cobalt demand is expected to surge in the coming years, as it is a key component of the lithium-ion batteries used to power electric cars. In fact, analysts estimate that the market will be in deficit by the next decade.
Supply to meet this surging demand is one of the main concerns in the market, as more than 60 percent of cobalt comes from the politically unstable Democratic Republic of Congo (DRC), where mining has been associated with child labor.
“Our project is an important development for the battery supply chain enabling access to a secure, stable, ethically sourced and environmentally sound supply of battery grade cobalt sulphate, mined safely and responsibly in the United States,” said Farquharson, who believes eCobalt could become the sole primary producer of cobalt in the country.
Some analysts believe that production from the DRC will continue to be needed even as new projects from companies like eCobalt come online.
Speaking to the Investing News Network earlier this year, Benchmark Mineral Intelligence analyst Caspar Rawles said Canada and Australia have some projects that could help meet upcoming demand, “[but] there’s no lithium-ion industry without DRC cobalt.” Click here to watch the full interview.
That said, there is incredible demand for cobalt from outside the DRC. As analysts at Eight Capital recently said in a note, “[t]he Idaho cobalt project is located close to potential end-users and provides potential for an ethical and low risk source of domestic cobalt supply.”
As of 1:00 p.m. EST on Wednesday, eCobalt’s share price was down 0.76 percent, trading at C$1.30. The company has been surging since January, and is up more than 140 percent year-to-date.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.


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