VANCOUVER (miningweekly.com) – TSX-listed project developer eCobalt Solutions has decided to rather focus on producing a cobalt concentrate at its Idaho Cobalt Project (ICP), citing a reduced premium on cobalt sulphate on the back of Chinese capacity consolidation, cost reduction and production increases.
“Due to these changing battery market dynamics, and in response to discussions with numerous potential offtake parties, the company has determined that delivering a clean cobalt concentrate product is the fastest route to production, generation of cash flows and reduction of price and technical risk to the project,” president and CEO Paul Farquharson said.
A clean cobalt concentrate is an upstream material for battery cathodes compared to cobalt sulphate, which would eliminate the requirement to build a full $124-million cobalt production facility (CPF), as reported in the September 27 feasibility study, which is expected to result in substantially reduced capital and operating cost for a more simplified flow sheet, the company said.
The significant incremental capital investment required to build a full CPF is not supported by the forecast price differential between cobalt concentrate and cobalt sulphate. Initial offtake terms received have indicated attractive pricing for the ICP’s clean cobalt concentrate product due to the product’s unique high cobalt content and medium to long term cobalt supply constraints resulting in a considerable improvement in project economics, Farquharson said.
Based on Thursday’s LME cobalt price of $30/lb (Co-99.3%), the ICP’s after tax net present value, at a 7.5% discount rate, and internal rate of return, are $183-million and 25.5%, respectively. Since capital and operating costs to produce cobalt sulphate at the CPF were a significant burden on project economics, the company believes that a more simplified flowsheet to produce a clean cobalt concentrate product may result in material reduction in both of these areas which may have a further significant positive impact on overall project economics.
eCobalt has engaged Micon International, SNC Lavalin and Dundee Sustainable Technologies to conduct detailed metallurgical testing and engineering for the revised flowsheet with the intent to develop feasibility level designs and costs for the revised flowsheet. The company has started receiving letters of intent for offtake and project financing from multiple parties on this new strategy and intends to identify its one or more partners by early 2018, after thorough evaluation.
The company has also engaged Micon to evaluate a detailed mine design and production schedule developed in-house with third party consultants to reduce planned dilution, while also working on an update to the resource statement.
The news prompted a 6% intraday rise in the company’s TSX-listed equity, lifting it to C$1.41 apiece.