First Cobalt, Glencore exploring feed purchase contract
Canadian cobalt refinery developer First Cobalt has changed its approach to be a market purchaser of feedstock, rather than a toll refiner, which the company says will provide it with greater leverage to the cobalt market.
In a company update on Tuesday, TSX-V-listed First Cobalt said that it had agreed with Glencore to finalise a long-term cobalt hydroxide purchase contract. In order to secure a diversity of supply, the company would supplement any feed provided by Glencore with other sources of ethical cobalt.
First Cobalt said it did not foresee any difficulties securing sufficient feedstock for the 5 000 t/d refinery.
"The change in approach towards feed purchase contracts results in greater exposure to the cobalt market and potentially a greater share of the project economics outlined in our May 4 engineering study,” said president and CEO Trent Mell.
With the decision to be a market purchaser of feedstock, the company had resumed discussions with lenders.
The maturity date on the company's $5-million loan with Glencore has been extended by one year to August 2022, which the company noted better aligned with the refinery commissioning. All other terms remained unchanged, including Glencore's right to convert all, or a portion of, the balance owing to common shares of First Cobalt at a discount to market of up to 15%.
Meanwhile, First Cobalt reported that cobalt hydroxide feed material from Glencore's KCC mining operation, in the Democratic Republic of Congo (DRC), was received in September, with leaching and neutralisation testing performed by SGS ahead of pilot plant test work. Bench scale work yielded cobalt recoveries of more than 97%, significantly higher than the 93% recovery reported in the engineering study. The 97% recovery is similar to recoveries achieved on other DRC cobalt hydroxide feedstock that First Cobalt tested in 2019 to produce battery grade cobalt sulphate.
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