VANCOUVER (miningweekly.com) – eCobalt Solutions has revealed positive economics from a feasibility study (FS) of the company's flagship Idaho Cobalt Project (ICP), the only environmentally permitted, primary cobalt project in the US.
Based on an underground mine, the FS envisions a target production rate of 800 short tons a day and a weighted average yearly output of 2.4-million pounds of cobalt, 3.3-million pounds of copper and 3 000 oz of gold over a 12.5-year mine life. The FS used a 0.25% cobalt cutoff grade.
The pre-production period is expected to stretch over 24 months.
Incorporating a 34% corporate tax rate and a 7.5% discount rate, the economic model calculated an after-tax net present value of $135.8-million and an internal rate of return of 21.3%, based on base-case pricing of $26.65/lb for contained cobalt in cobalt sulphate.
“Pre-construction activities are under way in preparation for project construction and mine development, contingent upon successful project financing. The project's main competitive strengths are having a primary cobalt deposit located in the US and a high reserve grade when compared to other existing sources of cobalt located globally,” president and CEO Paul Farquharson said in a news release.
The Vancouver-headquartered company also pointed out that the FS highlights multiple opportunities to enhance the economics of the project, including expansion of the resource, optimisation of the mine plan to process higher-grade material and detailed engineering at the cobalt production facility to further reduce risk and improve capital and operating costs.
The FS outlined a robust project that could eventually be the sole primary producer of cobalt in the US. Further, the outlook for the electric vehicle and lithium-ion battery markets supports sustained and long-term demand for cobalt – a critical ingredient in the cathodes of rechargeable batteries.
“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 US," Farquharson advised.
Management's immediate goal is to evaluate a variety of opportunities for the ICP. eCobalt is also considering securing offtake arrangements for cobalt sulphate heptahydrate. Independent of the FS, eCobalt has produced cobalt sulphate crystals from recent metallurgical testwork, which were shipped to potential offtakers for evaluation. Initial feedback regarding product quality has been positive and current requests for additional material for evaluation are being fulfilled, the company reported.
The ICP has Canadian National Instrument 43-101-compliant proven and probable reserves totalling 3.66-million tons grading 0.47% cobalt, for 34.51-million pounds of cobalt. The Ram deposit also contains 53 286 oz of gold grading 0.016 oz/t and 50-million pounds of copper grading 0.68%.
Cobalt prices are up 144% year-on-year on rising battery production and tightening supply of raw materials, specifically battery chemicals. Political instability in the Democratic Republic of Congo also continues to jeopardise half of the world's cobalt supply.
Prices recently topped $27.50/lb, compared with a five-year average of $13/lb. Demand for cobalt is projected to grow at 5.9% a year, compared with supply growth estimates of only 4.1% a year through to 2025. A refined cobalt supply deficit is expected to intensify from 2.5-million tonnes in 2020, to about 19.1-million tonnes of refined cobalt by 2025.
Standard-grade cobalt prices could rise from $32/lb in 2018 to $35/lb in 2025.