eCobalt Announces Cost Control Measures in Response to Market Conditions
Focus to be placed on securing offtake and finalizing feasibility study while preserving treasury
VANCOUVER, Feb. 20, 2019 /CNW/ - eCobalt Solutions Inc. ("eCobalt" or "the Company") (TSX: ECS) (OTCQX: ECSIF) (FRA: ECO) announces that in response to current cobalt market conditions it is imposing cost control measures throughout the organization to preserve its treasury while it focuses on critical path items needed to bring the Idaho Cobalt Project ("ICP") into production.
The cobalt price has fallen more than fifty percent since mid 2018 due to a current oversupply of product on the market resulting from excess cobalt production coming out of the Democratic Republic of the Congo and refined supply from China. While the long-term fundamentals for cobalt remain very strong, forecast prices for the near term have dropped as a result of this oversupply. In light of this near-term price weakness and its rippling effect on the capital markets, the Company is taking measures to preserve its treasury by reducing total overhead costs so that it can focus its resources on the next stage of development. These critical path items include securing offtake and finalizing the new feasibility study for the previously announced 1,200 ton per day mine plan.
While the Company continues to advance the ICP, non-essential operating and corporate expenses will be reduced or eliminated. Work at the ICP will focus on activities required to maintain the site and comply with the approved Plan of Operations, with the objective of re-commencing project development when full project financing is secured. Once a production decision has been reached, the timeline to production is still expected to be 18 months. The Company's workforce will be reduced to only those employees essential for completing all critical path items and ongoing activities at site, which will include continuation of the water monitoring program, monitoring of the storm water plan and environmental compliance.
"The work completed in 2018 included pre-construction activities to get the ICP ready for development, as required by our approved Plan of Operations, and puts us in a competitive position to capitalize on better market conditions once they return," stated Michael Callahan, eCobalt's President & CEO. "We will now continue to build on this progress with our focus on securing offtake, which will define final concentrate specifications and allow us to complete the work needed to finalize the new feasibility study. Once an economic feasibility study is produced and project financing is secured, we intend to fast track project development to bring the ICP into production for the benefit of our communities and all stakeholders. There has been a great deal of quality work completed by the team and we want to thank our employees for their hard work and dedication."
The long-term outlook for cobalt remains strong with demand expected to more than triple by 2030 driven by a global shift towards electrification. With growing demand for electric vehicles and the cobalt-containing lithium-ion batteries needed to power them, a supply deficit is expected to occur in the near term, which should bring with it a stronger cobalt price and a stronger market to support new projects needed to satisfy this demand.
"These measures are being imposed in line with our objective to safeguard the future of the Company," added Mr. Callahan. "We are confident that the price for cobalt will strengthen in the coming years and, with the work we are doing now, we intend to be in a position to capitalize on higher price environments once they return, creating a transparent and ethical supply of cobalt for the growing market."
About eCobalt Solutions Inc.
eCobalt is a Toronto Stock Exchange listed company advancing the Idaho Cobalt Project ("ICP"), the only near-term, environmentally permitted primary cobalt project in the United States. The ICP, located in east-central Idaho in the historic Idaho Cobalt Belt, is 100% owned by the Company's wholly owned subsidiary, Formation Capital Corporation, U.S. With eCobalt's significant land position in the Idaho Cobalt Belt, the ICP presents a district-scale opportunity with the potential to become a reliable and transparent source of supply for the growing cobalt market.
Cautionary Statement on Forward Looking Statements
This news release contains "forward-looking statements" within the meaning of applicable Canadian securities legislation. Statements in this news release pertaining feasibility studies, offtake and financing are forward-looking statements. These forward-looking statements are based on assumptions and address future events and conditions and are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are not guarantees of future results, performance or achievement. These risks, uncertainties and factors include general business, economic, competitive, political, regulatory and social uncertainties; actual results of exploration activities and economic evaluations; fluctuations in currency exchange rates; changes in project parameters; changes in costs, including labour, infrastructure, operating and production costs; future prices of cobalt; variations of mineral grade or recovery rates; operating or technical difficulties in connection with exploration, development or mining activities, including the failure of plant, equipment or processes to operate as anticipated; delays in completion of exploration, development or construction activities; changes in government legislation and regulation; the ability to maintain and renew existing licenses and permits or obtain required licenses and permits in a timely manner; the ability to obtain financing on acceptable terms in a timely manner; contests over title to properties; employee relations and shortages of skilled personnel and contractors; the speculative nature of, and the risks involved in, the exploration, development and mining business.
Such projections are and will inevitably always be dependent on assumptions about future mineral prices and development costs which will be subject to fluctuation due to global and local economic and industry conditions. Further information regarding risks and uncertainties which may cause results to differ from those contained in forward-looking statements is included in filings by the Company with securities regulatory authorities and is available at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Although the Company has disclosed that the ICP remains the sole, near term, environmentally permitted, primary cobalt deposit in the United States and offers a unique potential for North American consumers to secure an ethically sourced, environmentally sound supply of clean cobalt products, there is no guarantee that the Company will attain commercial production of such cobalt products for use in the rechargeable battery sector. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.
The statements contained in this news release in regard to eCobalt that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including eCobalt's beliefs, expectations, hopes or intentions regarding the future. All forward-looking statements are made as of the date hereof and are based on information available to eCobalt as of such date. It is important to note that actual outcome and the actual results could differ from those in such forward-looking statements. Factors that could cause actual results to differ materially include risks and uncertainties such as technological, legislative, corporate, commodity price and marketplace changes.
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SOURCE eCobalt Solutions Inc.
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