VANCOUVER — Vancouver-based eCobalt Solutions (TSX: ECS; US-OTC: ECSIF) hopes to restart construction at its Idaho Cobalt project (ICP) next year, which could set the stage for first production in early 2020. The site is in east-central Idaho, 40 km west of the town of Salmon.
In late September, the company released a feasibility study modelling an underground mine that would annually produce 2.4 million lb. cobalt, 3.3 million lb. copper and 3,000 oz. gold over a 12.5-year life.
The permitted project would use an existing 725-tonne-per-day mill infrastructure that has been on care and maintenance since 2013, due to low cobalt prices.
The company spent US$65 million on development before shelving the project three years ago, including: earthworks, a ball mill, flotation and filtration circuits, pumps, grizzlies, hoppers and conveyors.
The feasibility study builds on a preliminary economic assessment released in 2015, but incorporates a more conservative resource model, and a switch to longhole stoping from mechanized drift-and-fill mining.
The US$187-million development would focus on the Ram deposit, which hosts proven and probable reserves of 3.7 million tonnes of 0.47% cobalt, 0.68% copper and 0.45 gram gold per tonne. The resource calculations use a 0.25% cobalt cut-off grade.
ICP’s mineralization is reportedly composed of “syngenetic, stratiform, exhalative deposits within — or closely associated with — the mafic sequences of the regional Apple Creek Formation.” The deposits range from nearly massive to disseminated, with some cross-cutting mineralization.
ECobalt intends to produce a bulk cobalt-copper-gold concentrate that would run through a hydrometallurgical facility to become cobalt sulphate heptahydrate, which is used to make cathodes for rechargeable batteries.
“This mine plan could make us the sole primary producer of cobalt in the U.S.,” eCobalt president and CEO Paul Farquharson said during a conference call.
“We’re all aware of the future outlook on electric vehicles and battery markets, and cobalt is a critical ingredient in that equation. Our project provides secure access to safe, ethically sourced supply,” he continued.
The hydrometallurgical process would involve an autoclave, solvent extraction and crystallizers to produce cobalt-sulphate heptahydrate, copper-sulphate pentahydrate and magnesium-sulphate crystals.
ECobalt wants to build the facility on a railhead in Blackfoot, Idaho, which lies 250 km southeast of the mine site.
The company’s economic model features a US$136-million, after-tax net present value at a 7.5% discount rate, and a 21.3% internal rate of return, assuming an average base case price of $26.65 per lb. for contained cobalt in sulphate.
“The next step is project financing, and this study really provides the foundation for those discussions with potential offtake partners, debt providers and alternative lenders,” Farquharson said. “We’re obviously looking at all opportunities as we move forward, and I can say there’s tremendous interest out there from the battery and automobile manufacturers. We’ve already commenced pre-construction activities on-site.”
Canaccord Genuity analyst Eric Zaunscherb cut his eCobalt target price by 20¢ after the news to $1.40 per share.
He noted the feasibility study “features a lower-grade reserve and higher capital costs than we had modelled,” but added that “increased clarity in costs and a reduction in the discount rate on further drilling may have a significant impact on valuation going forward.”
ECobalt shares have traded in a 52-week range of 46¢ to $1.48 per share, and closed at $1.11 at press time. The company has 131 million shares outstanding for a $146-million market capitalization, and reported $17 million in working capital at the end of May.