2020 Refinery Study
On May 4, 2020, First Cobalt announced positive results from an engineering study conducted on its permitted cobalt refinery in Ontario, Canada. The study contemplates expanding the existing facility and adapting it to be North America’s first producer of cobalt sulfate, an essential component in the manufacturing of batteries for electric vehicles.
- Annual production of 25,000 tonnes of battery grade cobalt sulfate from third party feed, representing 5% of the total global refined cobalt market and 100% of North American cobalt sulfate supply
- Initial capital estimate of $56 million and an operating cost estimate of $2.72/lb of cobalt produced, which is competitive with global markets
- $37 million in undiscounted pre-tax free cashflow to the Project forecasted during the first full year of production
- $139 million after-tax net present value (NPV) using an 8% discount and 53% after-tax internal rate of return (IRR), representing a payback period of only 1.8 years
- Discussions underway with Glencore on commercial arrangements, financing and allocation of project economics; third party and government funding opportunities also under review
- Several EV manufacturers have expressed an interest in purchasing a North American cobalt sulfate
- Several opportunities will be evaluated over the coming months that could enhance project economics further, including alternative approaches to managing elevated sodium concentrations prior to returning process water to the environment
- Prefeasibility-level study also completed on an early ramp-up scenario using existing permits and equipment to conduct trial runs processing a different type of feedstock
All amounts are in US dollars unless otherwise indicated. Project economics are assessed over an initial 11-year period, however, the design capacity of a phase 1 dry-stack tailings area is 17 years. The feasibility study is not based on any existing mineral reserves or resources of the Company and does not contemplate that any of the Company’s current mineral projects will provide a source of feedstock for the refinery.
|Table 1 – Engineering Study Summary|
|Cobalt Hydroxide Payability||70%|
|Cobalt Sulfate, Minimum Grade||20.5%|
|Foreign Exchange (CAD:US)||1.375|
|Tailings Capacity, Phase 1||17 years1|
|Initial Capital Requirements||$56 million|
|Total Sustaining Capital||$0.6 million|
|Cobalt Production||$1.87/lb Co2|
|Sodium Treatment||$0.85/lb Co|
|Total Unit Operating Costs||$2.72/lb Co|
|Annual Production Summary|
|Cobalt Hydroxide Feed||18,369 tonnes|
|Feed Grade||30% Co|
|Annual Cobalt Production||5,096 tonnes|
|Annual Cobalt Sulfate Production||24,857 tonnes|
|NPV – Pre-Tax (8% Discount Rate)||$192 million (C$263 million)|
|NPV – After-Tax (8% Discount Rate)||$139 million (C$191 million)|
|IRR – Pre-Tax||64%|
|IRR – After-Tax||53%|
|Cash Flow – Pre-Tax||$350 million (C$482 million)|
|Cash Flow – After-Tax||$259 million (C$356 million)|
|Post-Tax NPV (8%)/Initial Capital||2.5|
|Payback Period||1.8 years|
1 Project economics calculated for the initial 11 years only. In aggregate, phases 1 and 2 of the dry stack tailings areas are expected to accommodate 34 years of production.
2 Does not include the purchase of cobalt hydroxide feed; however, project economics reflect a 70% long term payability assumption on feed and transportation costs
This report was prepared to summarize the results of the feasibility study related to the First Cobalt Refinery Project. This report does not constitute a feasibility study within the definition employed by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), as it relates to a stand-alone industrial project and does not concern a mineral project of First Cobalt. As a result, disclosure standards prescribed by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) are not applicable to the scientific and technical disclosure in this report. Any references to scoping study, prefeasibility study or feasibility study by First Cobalt, in relation to the Refinery Project, are not the same as terms defined by the CIM Definition Standards and used in NI 43-101.
2019 Refinery Study
On May 28, 2019, First Cobalt announced the results of a scoping study for the restart of the First Cobalt Refinery in Canada using third party cobalt hydroxide as feed 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 (Case 3) 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.
A link to the full report is below and the summary findings are as follows:
Potential production scenarios (Numbers in US$)
|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||$4.69|
|Case 1||Using an expanded SX circuit, production is limited by capacity of the currently installed liquid-solid separation equipment||1,964||$18.4M||$2.88|
|Case 2||Using additional liquid-solid separation equipment, production limited by filtration capacity and the size of the existing building||5,020||$37.5M||$2.29|
*Tonnes per annum of cobalt in cobalt sulfate
**Operating costs were reduced by approximately 30% since the May 28, 2019 press release due to lower reagent costs, based on quotations rather than estimates