VANCOUVER (miningweekly.com) – Investors will have to wait a little longer to review an update of the 2014 feasibility study on project developer Fortune Minerals’ Nico cobalt/gold/bismuth/copper project, in Canada’s Northwest Territories.

The London, Ontario-based explorer said on Thursday that the feasibility study update by Hatch and Micon was proceeding well for the initially planned scope of work for the mine and concentrator.

However, Hatch required two metallurgical testwork programmes to properly size equipment and conduct the detailed design work for the copper cementation circuit and the manganese removal step in the cobalt sulphate circuit for the planned refinery near Saskatoon, Saskatchewan.

The company explained that this work was currently in progress at SGS Lakefield Research, but because of laboratory congestion, it would not be completed until the end of October.

The metallurgical flowsheet for Nico was previously confirmed from piloting, and a high-quality cobalt sulphate heptahydrate product has already been produced that meets the specifications of the rechargeable battery industry, Fortune said in a press release.

Therefore, completion of the feasibility study update has been delayed until after metallurgical testwork and the optimisation of the mineral reserves, production rate and mine schedule – if and as required – have been completed.

Nico is a primary cobalt project with about 60% of projected revenues from cobalt at current commodity prices. The project also boasts 12% of the global bismuth reserves.

The Nico deposit contains openpit and underground proven and probable reserves totalling 33-million tonnes containing 82-million pounds of cobalt, 102-million pounds of bismuth, 1.1-million ounces of gold, and 27-million pounds of copper. At the planned mill throughput rate of 4 650 t/d, the mineral reserves will sustain operations for 20 years.

More than $115-million of work has already been conducted for the Nico project, and Fortune has appointed PricewaterhouseCoopers Corporate Finance to help secure the required capital.

SITE ACTIVITY
Fortune also reported that it had completed the winter, spring and summer phases of field activities at the Nico mine site, which was required by the Wek'eezhii Land and Water Board before mine construction could start. The final water quality sampling for this programme will be completed in September.

Fortune also advised that it was able to improve and expand roads and lay-down areas at the mine site in preparation for the arrival of supplies and materials on the winter ice road.

Pending financing, Fortune plans to conduct the first year of construction of the C$589-million-plus mine using winter road access, while the Northwest Territories government (GNWT) Transportation Department constructs a new all-weather gravel road to Whati. Fortune will construct a 50 km gravel spur road to connect with the government road as part of its development. Fortune and the GNWT are also negotiating a socioeconomic agreement.

MARKET ON FIRE
Cobalt prices have jumped a whopping 126% year-on-year to hit a new all-time high of $27.33/lb, or $60 250/t, while higher-grade product has recently broached the $30/lb-level. This is significantly more than the $16/lb used in Fortune's 2014 feasibility study.

The market for cobalt has had significant, 20-year compound annual growth of about 6%, and Commodities Research Unit (CRU) reports a current annual mine output of 117 000 t.

Demand growth for cobalt is expected to accelerate on the back of its use in lithium-ion batteries (about 50% of the current market), which are needed to power portable electronic devices, electric vehicles (EVs) and stationary cells to store electricity from renewable energy (primarily wind and solar), as well as off-peak charging from the electrical grid.

Fortune is banking on the transformative evolution of automobiles, from internal combustion engines to electric drivetrains, which is expected to dramatically impact on future cobalt demand.

Whereas a typical smartphone battery contains between 5 g and 20 g of cobalt, EV batteries usually contain between 4 000 g and 14 000 g of the energy metal. Tesla's first $5-billion, 35 GWh ‘Gigafactory’, in Nevada, started commercial production earlier this year and will require about 7 000 t/y of cobalt when it reaches full production in 2018.

More than 16 battery mega-factories are either under construction or have been announced, including an even larger 100 GWh plant for CATL, in China.

Exane BNP Paribas is projecting that 300 000 t of cobalt will be required to satisfy demand by 2025.

Cobalt is also used in superalloys for aerospace applications, high-strength alloys for cutting tools and cemented carbides, permanent magnets, surgical implants, pigments, catalysts, and additives in food and agricultural products.

The cobalt market transitioned into a supply deficit in 2016, which is expected to continue for the foreseeable future. Future supply is also at risk due to geographic concentration of mine and refinery supply and because 98% of current non-artisanal cobalt production is a by-product of either copper or nickel mining.

Low primary metal prices have caused some copper-cobalt and nickel-cobalt mines to close. More than 60% of current mine production is from the politically unstable Democratic Republic of Congo (DRC) and China controls 52% of cobalt refinery production and 84% of refined cobalt chemical supply.

Ethical sourcing of raw material has become an issue for the Electronics Industry Citizens Coalition, because of child labour and unsafe working conditions in some DRC mines. There are also concerns about metals being used to finance conflicts under the US Dodd-Frank and European Union Ethical Sourcing legislation.