TOronto, ON - (July 15, 2019) - First Cobalt Corp. (TSX-V: FCC, OTCQX: FTSSF) (the "Company" - https: // www.commodity-tv.net/c/search_adv/?v=298892) has agreed a term sheet with Glencore AG, which provides the framework for a non-dilutive, fully funded, step-by-step approach to restarting the First Cobalt refinery in Ontario, Canada , outlines. The framework continues to be subject to a number of conditions and outlines the key milestones for a long-term strategic relationship
ng, which could bring a reliable source of domestically refined cobalt to the North American market.
Highlights
- The goal is to build a long-term collaboration to deliver refined cobalt to the North American market.
- Phase 1 includes a $ 5 million dollar loan from Glencore to support additional metallurgical testing, engineering, cost estimates, field work and permits related to the re-commissioning of the First Cobalt refinery, including a final feasibility study for refining the refinery at 55 tonnes per day ( tpd).
- Phase 2 plans to commission the 2020 12 tpd refinery to produce a battery-grade cobalt sulfate prequalification for the electric vehicle supply chain.
- Phase 3 involves upgrading the refinery to a feed-in amount from 55 tpd to 2021 using the current site infrastructure and buildings.
- Total investment in the three phases is estimated at approximately $ 45 million, and the 2 and 3 phases continue to be in line with the results of the studies conducted in Phase 1. The capital invested will be repaid by First Cobalt from the cash flow generated under a long-term refining agreement.
Trent Mell, First Cobalt President & Chief Executive Officer, commented:
“The transition to cash flow as a North American refinery is now our main focus and today's news shows that we are getting closer and closer to that goal. Glencore supported the entire process and we look forward to working closely with their technical team to make it a success.
This partnership will help First Cobalt achieve its stated goal of delivering ethical cobalt to the North American electric vehicle market. An operating refinery in North America can benefit all North American cobalt projects as it significantly reduces the investment costs for starting a new mine. "
On the 21. In May 2019, First Cobalt and Glencore signed a letter of intent setting out the terms of a potential partnership for the production of refined cobalt for the North American market. Since then, the parties have conducted due diligence and conducted extensive discussions to develop a business plan for the First Cobalt refinery. The termsheet announced today outlines a step-by-step approach that could put the refinery into operation in less than a year and extend 2021 to 55 tpd.
During the first phase, Glencore First Cobalt would provide 5 millions of dollars to complete the detail engineering and estimation, metallurgical testing, field work and permits related to the expansion of the First Cobalt refinery. In particular, this phase includes the preparation of a final feasibility study for an 55 tpd period refinery extension. The start of the 1 phase is subject to a number of suspensive conditions, including the conclusion of a loan agreement and related documentation, the completion of the remaining due diligence, the execution of a term sheet setting a framework for the commercial terms of the 2 and 3 phases, and all necessary regulatory approvals.
First Cobalt Refinery, Ontario Canada
The second phase would foresee the 2020 re-commissioning under existing permits with 12 tpd feed-in, subject to the results of additional studies and an economic analysis to be completed in 1 phase. The parties believe that early restart with lower throughput brings many benefits. The 12 tpd scenario will allow the parties to evaluate various refined product options, including the production of battery-grade cobalt sulfate for pre-qualification by an electric vehicle manufacturer.
The third and final phase is the extension to 55 tpd, as in a report by Ausenco from 28. May 2019 announced and available on the company's website at www.firstcobalt.com/refinery. The Ausenco report estimates that First Cobalt could produce 5.000 tonnes of contained cobalt in sulfate per year assuming that cobalt hydroxide feed has a grade of 30% cobalt.
A final decision to reinstate the First Cobalt Refinery will depend on the results of a feasibility study for an 55 tato expansion scenario, which is expected to be completed later this year. Restarting the refinery is tied to a long-term feed supply or exclusive toll agreement with Glencore rather than the short-term development of any of the Company's current projects.
As part of the $ 5 $ 1 advance, Glencore AG would transfer funds to First Cobalt's wholly owned subsidiary, Cobalt Camp Refinery Ltd. guaranteed by First Cobalt and by a general security agreement and a pledge of shares in Cobalt Camp Refinery Ltd. would be secured. The loan has a term of two years and can be extended for a further year in the election of First Cobalt. The loan interest rate would be LIBOR + 5%, with interest being paid semi-annually until maturity. First Cobalt will be able to defer interest and increase the outstanding principal amount on each Interest Payment Date. Glencore would reserve the option to convert the outstanding loan and interest balance on maturity at a discount of fifteen percent of the weighted average price of 10 days into ordinary shares of First Cobalt.
Should the parties proceed to the 2 and / or 3 phases, it is intended to convert the 1 phase loan into a larger Accordion Facility, the terms of which are still being reviewed. The Accordion Facility will be used for reopening with 12 tpd and for investments related to an extension to 55 t / d.
The parties continue to work on the loan documentation and a number of commercial details. Glencore anticipates that Glencore will provide 100% of material requirements in both the 12 tpd and 55 tpd scenarios under a toll agreement. First Cobalt will also enter into a service agreement with XPS-Expert Process Solutions, a Sudbury-based metallurgical consulting, technology and testing facility associated with Glencore to provide technical support to the First Cobalt team. A tendering process is nearing completion to designate leading third party companies to oversee advanced metallurgical testing, feasibility study and approval.
About the FCC refinery
The First Cobalt Refinery is a hydrometallurgical cobalt refinery at the Canadian Cobalt Camp, located about 600 kilometers from the US border. The First Cobalt Refinery has the potential to produce either cobalt sulfate for the lithium-ion battery market or cobalt metal for the North American aerospace industry or other industrial and military applications.
First Cobalt Refinery is the only approved primary cobalt refinery in North America. The Company has recently completed a third-party cobalt hydroxide trial as a potential source of material and has confirmed that existing processes at the First Cobalt refinery are capable of producing a high-purity, battery-powered cobalt sulfate. With no cobalt sulphate production in North America today, First Cobalt Refinery has the potential to become the first such manufacturer for the US electric vehicle market.
A study by Ausenco defined the production capacity, investment costs and operating costs associated with the re-commissioning of the Ontario refinery in Canada, using third-party cobalt hydroxide and another third-party material source. Ausenco has now reduced its operating cost estimates by approximately 30% as reagent costs are lower and no longer based on estimates but on actual offers. The study does not comment on the economics of refinery operation, but is an estimate of the cost of re-commissioning. A copy of the study is available at www.sedar.com and on the company's website. A feasibility study will assess the economic viability of the refinery with a capacity of 55 tpd.
A corporate film about the first cobalt refinery in Ontario, Canada, is available on the company's website at http://www.firstcobalt.com/investors/media-gallery/videos/.
Corporate Update
In connection with services rendered for the quarter ended June 30, 2019, the Company issued 612.800 Deferred Share Units (“DSUs”) in lieu of cash compensation to which the Directors would have been entitled. In accordance with the Company's amended and amended Long Term Incentive Plan (the “Plan”), the DSUs have been valued based on today's closing price of the Company's common stock on the TSX Venture Exchange. DSUs are transferred immediately and cannot be exercised until a director ceases to serve on the board. In place of incentive payments, 76.563 DSUs were also granted to certain company executives. The same executives have also agreed to lower their base salaries by 5% to reflect current market conditions and reduce the company's cash outflows.
The Company has also agreed with certain insiders to cancel 1.283.482 incentive stock options held by them, which will result in a decrease in the total number of outstanding options by 11%. Following the termination, 11.398.333 stock options are currently pending from the plan.
About First Cobalt
First Cobalt is a Canadian-based pure cobalt company and owner of the only approved primary cobalt refinery in North America. The company is reviewing a restart of the First Cobalt refinery in Ontario, Canada, which could produce 5.000 tonnes of cobalt sulfate or metallic cobalt per year. First Cobalt's primary cobalt project is the Iron Creek Cobalt Project in Idaho, USA, which has 26,9 mineral resources of millions of tons with a cobalt equivalent of 0,11% or an alternative background scenario of 4,4 million tonnes with a cobalt equivalent of 0,3%. For more information on the resource estimate for the Iron Creek Cobalt Project, readers are encouraged to check out the company's 18 technical report. September 2018 (as amended), which is available as a copy on SEDAR and on the Company's website.
On behalf of First Cobalt Corp.
Trent Mell
President & Chief Executive Officer
For more information visit www.firstcobalt.com or contact us:
Catch Advisory Group
+ 1.416.900.3891
In Europe:
Swiss Resource Capital AG
Jochen Staiger
www.resource-capital.ch
Neither the TSX Venture Exchange nor its regulatory service provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Caution about resource estimates
Readers are cautioned that mineral resources are not economic mineral reserves and that the economic viability of resources that are not mineral reserves has not been demonstrated. The estimate of mineral resources can be significantly influenced by geological, ecological, licensing, legal, title, socio-political, marketing or other relevant issues. The mineral resource estimate is classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum's 2014 CIM Definition Standards on Mineral Resources and Mineral Reserves, incorporated by reference into NI 43-101. Canadian rules prohibit inferring mineral resource estimates from forming the basis of feasibility or pre-feasibility studies or economic studies other than NI 43-101 preliminary economic assessment. Readers are cautioned not to assume that further work on the named resources will result in mineral reserves that can be economically mined. An inferred mineral resource as defined by the CIM Standing Committee is “that part of a mineral resource for which the quantity and quality or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply, but not verify, geological continuity and grade or quality. An Inferred Mineral Resource has a lower confidence than that applicable to an Indicated Mineral Resource and is not allowed to be converted into a Mineral Reserve. It is reasonable to expect that the majority of the Inferred Mineral Resources could be converted into Indicated Mineral Resources with continued exploration. "
Cautionary note regarding forward-looking statements
This press release may contain forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable securities laws and the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward-looking statements. In general, forward-looking statements can be made through the use of terminology such as “plans,” “expects,” “estimates,” “intends,” “anticipates,” “believes” or variations of such words or statements that certain acts, events or results “may “,“ Could ”,“ would ”,“ could ”,“ could ”,“ could ”,“ could ”,“ could ”or“ be achieved ”. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance and opportunities to differ materially from those implied in such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements are set out in management's discussion and analysis and other disclosures of risk factors for First Cobalt available on SEDAR at www.sedar.com. were published. While First Cobalt believes that the information and assumptions used in preparing the forward-looking statements are reasonable, undue reliance should be placed on these statements, which speak only as of the date of this press release, and there can be no assurance that such events will occur will occur in the specified time periods or at all. Except as required by law, First Cobalt disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
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