Canadian mining firm Fortune Minerals has cut back plans for the Nico cobalt/gold/bismuth/copper project in the Northwest Territories, reporting on Thursday that the current cobalt price environment did not justify the expanded throughput rate that it had considered.
Work on the 6 000 t/d project had been suspended to allow for an updated technical report based on a smaller, higher grade project.
The 2014 feasibility study of the Nico project validated a mill production rate of 4 650 t/d, using a combined openpit and underground mining strategy, as well as vertically integrated development.
An updated study by Hatch, P&E Mining Consultants and Micon International had considered an expanded mill throughput rate of 6 000 t/d and a number of process improvements for the vertically integrated development.
However, Fortune said that the study concluded that the additional capital required to construct a larger project would not deliver a commensurate increase in cash flows to justify the expansion from 4 650 t/d at prevailing cobalt and bismuth prices.
“An environment that has seen curtailment from the world’s largest cobalt mines is not conducive for an expanded, capital intensive project at this time,” Fortune president and CEO Robin Goad said in a statement.
A fall in cobalt prices has prompted diversified major Glencore to halt output for two years from end-2019 at its Mutanda mine in the Democratic Republic of Congo (DRC), the world's biggest cobalt mine.
But Goad said that Fortune continued to believe that the world would require new sources of cobalt that were independent of the DRC to meet the increase in demand from the battery sector.
“Fortune is optimising its Nico development to be more robust at various cobalt prices and position the company to support the transformation of the auto industry.”
The company is considering various options for the project, including the alignment of the development schedule with an expected deficit in cobalt supply in 2022/23 when demand for batteries in electric vehicles is anticipated to outstrip production from existing mines and known development projects.
ROAD UPDATE
Meanwhile, Fortune reported that construction of the Tlicho road began in September and was progressing quickly.
This C$200-million initiative of the Canadian, Northwest Territories and Tlicho governments would provide road access to the community of Whati, located 50 km south of the Nico deposit, by connecting the community to the Territorial highway system.
Fortune has received environmental assessment approval for a spur road between Whati and the mine site.
The Tlicho road is a critical enabler for the Nico development that will allow metal concentrates produced at the mine to be trucked to Hay river for transportation by rail to a refinery in southern Canada for processing or to a port of export.