First Cobalt reports more positive results at Ontario refinery

First Cobalt (TSXV: FCC; US-OTC: FTSSF) has produced a battery-grade cobalt sulphate for the second time in a row but using a different feed source, the company says.

The second set of tests yielded battery grade cobalt sulphate assaying 21.4% cobalt derived from a cobalt alloy feed, and was produced at the company's hydrometallurgical refinery in Ontario, 600 km from Canada's border with the U.S., the only fully permitted primary cobalt refinery in North America.

"The second test demonstrated the plant's versatility to carry out custom runs to different specifications and so could provide a finished product for a variety of potential customers," Trent Mell, First Cobalt's president and CEO, said in a telephone interview. "And although the results weren't unexpected, they are significant because they demonstrate for the second time - and using a different feed material - that our refinery is capable of producing battery-grade cobalt sulphate that surpasses the reference-grade of 20.5% for sulphate pricing."

The new results follow tests carried out in 2019, which returned assays of 20.8% cobalt from a cobalt hydroxide feed. Both tests resulted in 'high purity' cobalt sulphate grading over 99.9%, the company reported.

Further adjustments to the process will enable the refinery to improve specifications, allowing the company to provide a variety of products with different levels of impurities (e.g. manganese and nickel) to different types of customers.

Trent Mell, president and CEO of First Cobalt.

The most common use of cobalt sulphate is as a precursor for cathodes used in lithium-ion batteries for electric vehicles and consumer electronics. Cobalt is also a critical element in the manufacture of lithium-ion rechargeable batteries. Cathodes made from cobalt significantly improve the energy density, power and performance of rechargeable batteries compared with batteries that lack cobalt.

Investments by market players and the demand for lithium-ion batteries for electric vehicles are driving the cobalt market. For example, Tesla invested about US$5 billion in its lithium-ion battery factory in Nevada, while Porsche has invested over US$1 billion in electric vehicle production, and Faraday Future, a U.S.-based technology start-up and a potential competitor to Tesla, has spent US$1 billion in the development of electric vehicles.

The global market for cobalt sulphate will be worth over US$1 billion by 2023 with a compound annual growth rate of 1.8% up to 2023, say analysts at Allied Market Research. Most of the global supply of cobalt sulphate comes from Chinese refineries using cobalt mined from the Democratic Republic of Congo, where the majority is shipped to Asia for refining.

Last year, First Cobalt entered a strategic relationship with Glencore (LSE: GLEN). The two companies are currently negotiating a commercial supply agreement for the supply of cobalt feed from the DRC for a four-and-a-half-year period. Glencore also advanced First Cobalt a US$5 million load to complete a pre-feasibility study for the recommissioning and expansion of the refinery, with the promise of further financing if the refinery can increase its production from a 12-tonne-per-day operation to 55 tonnes per day.

"Our partnership with Glencore will put us at the center of producing battery-grade cobalt sulphate for the North American and European markets," said Mell. "It is a significant accomplishment, as the majority of refined cobalt for the electric vehicle market is produced in Asia. With no cobalt sulphate production in North America today, First Cobalt stands to become the first such producer for the American electric vehicle market."

The feasibility study on restarting the refinery is currently in its final stages and is due for release at the end of April, according to First Cobalt. A final decision on the recommissioning of the refinery will be contingent on the results of the feasibility study and the completion of a long-term feed supply agreement with Glencore.

"Everything is starting to come together. We've got a good understanding of our flowsheet, the engineering works and plant design are progressing extremely well, and we're pulling together the different quotes on capex and opex costs," Mell said. "There have been no red flags to date so far, and I remain very optimistic that we will have a facility that is competitive on a global scale, possibly by the fall of this year."

The company is trading at 10.5 ? per share within a 52-week range of 8 ? and 25 ?.

The junior has about 387 million common shares outstanding for a $41-million market capitalization.