First Cobalt and Glencore Consider Cooperating on Cobalt Refinery Restart
First Cobalt Corporation announced that it has agreed to a framework for a partnership with Glencore AG to cooperate on the recommissioning of a cobalt refinery in Cobalt, Ontario.
The framework arrangement known as a "term sheet" remains subject to a number of conditions, and outlines the key milestones to a long-term strategic relationship that could bring a reliable source of domestically refined cobalt to the North American electric battery market.
The framework will be phased-in and is the first step to establishing a long-term partnership.
Phase 1 entails a US$5 million loan from Glencore to support additional metallurgical testing, engineering, cost estimating, field work, and permitting associated with the recommissioning of the First Cobalt Refinery, including a definitive feasibility study for a 55 tonnes per day (tpd) refinery expansion.
Phase 2 envisions commissioning the Refinery at a feed rate of 12 tpd in 2020 to produce a battery grade cobalt sulfate for prequalification for the electric vehicle supply chain.
Phase 3 involves an expansion of the Refinery to a 55 tpd feed rate by 2021, using the current site infrastructure and buildings
Total capital investment under the three phases is estimated at approximately US$45 million and Phases 2 and 3 remain subject to the findings of the studies undertaken during Phase 1.
Capital invested will be repaid by First Cobalt from cash flow generated under a long-term refining arrangement.
On May 21, 2019, First Cobalt and Glencore signed a memorandum of understanding outlining the terms of a potential partnership to produce refined cobalt for the North American market. Since that time, the parties have conducted due diligence and held extensive discussions to develop a business plan for the First Cobalt Refinery.
The term sheet announced by First Cobalt outlines a phased approach that could see the refinery operational in less than a year and expanded to 55 tpd in 2021.
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