North American cobalt race is on
eCobalt Solutions Inc. (TSX: ECS | OTCQB: ECSIF), based in Vancouver, boasts sole ownership of the only advanced stage, near term, environmentally permitted, primary cobalt deposit in the United States. As discussed in a previous post, on September 21, 2016, the company is dedicated to environmentally sound mining processes and their Idaho Cobalt Project (ICP) aims to offer consumers a transparent supply of ethically sourced and environmentally friendly battery grade cobalt chemicals, produced safely and responsibly in the United States.
Battery materials accounted for 49% of cobalt demand in 2015 and battery sector growth is expected to grow 11.7%, and electric vehicles have the potential to more than double cobalt demand. Tesla, Ford, Mitsubishi, Porsche, Aston Martin, BMW, GM, Volvo, BYD, Renault Nissan, Mercedes Benz, and Volkswagen have all announced significant financial investments in producing Electric Vehicles (EV) and/or Energy Storage Systems (ESS) in the next several years.
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On the 5th of October, the The U.S. Defense Logistics Agency (DLA) said it has a mandate to buy lithium cobalt oxide (LCO) and 2,160 kg of lithium nickel cobalt aluminium oxide (NCA) in the fiscal year starting 1 October 2016. The amounts were detailed by the DLA in its Annual Materials Plan for financial year 2016-2017, which runs from October to September. This is double the volume that the DLA was mandated to buy in the 2015-2016 fiscal year.
ICP is America’s only near term, primary cobalt deposit with all necessary approvals required for construction and a fully approved Plan of Operations. eCobalt recently released feasibility level metallurgical work and has demonstrated it can successfully produce high purity, battery grade cobalt sulfate from ICP ore. The project is slated to produce the equivalent of 1,500 tons of high purity cobalt sulfate annually over a projected mine life of 12.5 years. Whilst at present, there is no offtake contract with the DLA, we believe it makes sense that should the US continues to stockpile the metal, then ICP’s ore would more than likely be a strong candidate to receive that government supply contract.
After receiving positive results from the preliminary economic assessment and additional metallurgical test work conducted in 2015, On June 21, 2016, eCobalt announced the signing of an agreement with Micon International Limited (Micon) for technical services to conduct a Bankable Feasibility Study (BFS) on the ICP, which is expected to be completed before the end of 1Q-2017. In addition, positive results from additional metallurgical test work to produce cobalt sulfate heptahydrate were announced in March 2016. These results are expected to be included in the BFS.
Staying true to their commitments, the ICP site incorporates several features that reduce its overall environmental footprint and waste production. In addition to a joint conservation program with the Idaho Conservation League, eCobalt claims that the modest 135-acre disturbance makes the site 100% reclaimable, and will minimise impact further by utilising an underground project design. The underground mine will have a target production rate of 800 tons per day with a weighted average annual production of 2,771,000lbs cobalt, 4,533,000lbs copper and 3,600oz gold over a 12.5-year life.
The total capital cost over the life of the mine is estimated at $201.41 million, including $146.76 million for initial capital, and $54.65 million in sustaining capital and mine development capital during production. The overall cash production cost is estimated at $468.73 million of processed cobalt contained in cobalt sulfate heptahydrate and $175.58 million of processed cobalt sulfate heptahydrate net of by-product credits. The preliminary economic assessment has post-tax NPV at $113 million (IRR 24.07%), with a life of mine gross revenue of just under a billion dollars.
As of August 2016, eCobalt reports working capital of CAD$3.63 million, the Company has no long-term debt, and announced a 25-month shelf offering of $100,000,000.
Lara has been an analyst for over ten years, starting her career as an equity analyst at Foord Asset Management and more recently as the ... <Read more about Lara Smith>