Idaho Cobalt Project
Project Overview
The Idaho Cobalt Project (“ICP”) is eCobalt’s flagship primary cobalt deposit located in the mining friendly state of Idaho, U.S.A. Over the course of the last 20 years, the Company has spent over $120 million developing the project, which is now fully environmentally permitted with proven mineable reserves of cobalt and secondary copper and gold. The ICP is 100% owned through the Company’s wholly owned subsidiary, Formation Capital Corporation, U.S. The ICP is located in the heart of the Idaho Cobalt Belt, a unique mineral rich, prolific metallogenic district unique to North America.
The market for cobalt is projected to grow at a CAGR of over 11% over the next 10 years due primarily to growing demand for electric vehicles. At the same time, consumers are demanding ethical sources for materials. With >60% of the world's cobalt coming from the Democratic Republic of Congo in West Africa, this creates a massive need to tap into resources that are ethically sourced and supplied – cobalt resources like the ICP’s.
eCobalt is the only near-term primary cobalt producer in the US, with initial production slated for Q4 2019 with full production planned for H1 2020 in a vertically integrated mine to market operation. The Company is committed to providing clean cobalt products, essential for the rapidly growing rechargeable battery and renewable energy sectors, made safely, responsibly and transparently in the United States.
Location
The ICP is comprised of two operations in two separate locations in Idaho; the Mine and Mill and the Cobalt Production Refining Facility (“CPF”).
The ICP’s Mine and Mill site is geographically located in East Central Idaho, approximately 26 miles west of the town of Salmon. Extensive earthworks at the Mine and Mill have been completed including the dry stacked tailings waste storage facility, mill pad, concentrator pad, ore haul road, concentrate haul road, water management ponds and partial construction of the portal bench. Pre-construction activities are ongoing that include grid power poles, line and substation installations to the site.
The CPF site has been secured in an industrial park in the Blackfoot municipal area. Owing to its location, many of the infrastructural requirements at the CPF are already in place or relatively simple to complete. Infrastructure in place includes power supply from utility connection point adjacent to the Blackfoot site, municipal water supply, waste water disposal, rail spur and connection to the adjoining rail line. eCobaltowns the CPF building structure which is on site and ready for assembly.
Geology & Mineralization
The ICP is centered within the Idaho Cobalt Belt (“ICB”) – a unique example of sea-floor hydrothermal brines that vented along an ancient rift within a deep-water setting, providing for an interesting and distinctive geochemistry. The ICB is a northwest-trending zone of Co-Cu-Au occurrences, at least 64 km long and up to 10 km wide, centered on the Idaho Cobalt Project.It is an exceptional metallogenic province in which cobalt occurs in sufficiently high concentrations to make it the primary metal in the deposits.
The deposits are mostly strata-bound and appear to have formed during a mafic volcanogenic-exhalative mineralizing event on a paleo-sea-floor ca1600 million years ago. More recent regional metamorphic events have remobilized Cu and, to a lesser extent, Co in varying degrees throughout the belt. The deposits are unusually rich in Co, Cu, Fe, As, Au, B, Bi and light rare earths, but low in Ni (relative to Co), Ag, Pb, and Zn. The synsedimentary controls, mineralogy and geochemistry are unusual among ore deposits, though similar features in some other deposits are known. Sediment-hosted deposits are major ore producers in the world, but unlike the ICB, most tend to be Pb and Zn rich.Some sediment-hosted deposits that contain Cu also contain Co - notably, the deposits of the Katanga province of the Democratic Republic of the Congoand the adjoining Zambian Copperbelt deposits. Significant differences exist between deposits in these West African deposits and the ICB, whereas many intriguing similarities are found between ICB deposits and Sullivan, Canada, and Mount Isa and Broken Hill, Australia.
The ICB is currently known to host several Co-Cu deposits within several sequences of metamorphosed, mafic volcanoclastic rocks.
Mineralization at the ICP is closely associated with the mafic sequences of the middle unit of the Apple Creek Formation. Dominant ore minerals include cobaltite (CoAsS) and chalcopyrite (CuFeS2), with lesser, variable occurrences of gold. Other minerals present in small quantities are pyrite (FeS2), pyrrhotite (FeS), arsenopyrite (FeAsS), linnaeite ((Co Ni)3S4), loellingite (FeAs2), safflorite (CoFeAs2), enargite (Cu3AsS4) and marcasite (FeS2).
Operations & Infrastructure
The operations office for the ICP is located in the town of Salmon, where the Company’s subsidiary Formation Capital owns two office buildings housing administrative, field, operational and management personnel, as well as several owned or leased warehouses and laydown yards.
Aside from core storage facilities, approximately $16M worth of pre-paid, long lead time items are stored and ready for delivery and assembly at the mine site and mill.This equipment includes the ball mill, grizzlies, hoppers, crushers etc. Some of this equipment has already been delivered to the site in preparation for the re-commencement of construction.One warehouse and yard site owned by the Company will be used as a mustering point for construction and operations.It is expected that this site will also serve as temporary storage of concentrate prior to shipment to the CPF and incoming shipments bound for the mine site.Another local site will be used for employees who will be bussed to site.
Infrastructure at the ICP mine/mill was partly constructed during an earlier stage of project development during 2011 and 2012, until the project was placed on care and maintenance in early May of 2013 due to adverse market conditions. This previous construction, as demonstrated in the location figure above, included upgrades of portions of the access road from the local highway to the mine site, site preparation including stripping and grading, partial completion of earthworks for the first cell of the Tailings Waste Storage Facility and the installation of incoming power supply line and substation completed during the last phase of construction. Tie-ins to the supply line and the site distribution systems are partially complete and will be concluded during the next phase of construction. The ore haul road to the portal location and partial construction of the portal bench have also been completed. A Hilfiker wall will be constructed during final construction prior to mine development.
Resources & Reserves
The current National Instrument 43-101 compliant Technical Report, prepared by Micon International (“MI”) in conjunction with SNC Lavalin (“SNC”) both of Toronto, Canada reporting mineral resource and reserve estimates, was announced in the Company’s news release dated September 27, 2017. The Feasibility Study (“FS”) is based on an underground mine with a target production rate of 800 short tons per day (“tpd”) and a weighted average annual production of 2.4M lbs of cobalt, 3.3M lbs of copper and 3,000 oz of gold over a 12.5 year mine life with an estimated pre-production period of 24 months utilizing a 0.25% cobalt cut-off grade. The FS outlines the production and processing feasibility of ICP as an underground mine and mill, developing the Company’s Ram deposit of the ICP.The economic model uses a 34% corporate tax rate and a 7.5% discount rate, resulting in an after-tax NPV of $135.8M and an IRR of 21.3% using an average base case price of $26.65/lb for contained cobalt.
The Company is currently preparing a new optimized FS, which outlines the production of a clean cobalt concentrate, which is expected to be completed in Q2 2018. This new FS will incorporate simplifications to the previous flow sheet of the CPF, where the original design called for the production of cobalt, copper and magnesium sulphates, as well as gold and copper concentrate.The new, much simpler design to produce a bulk clean cobalt concentrate is expected to result in a significant improvement in reported CAPEX and OPEX.
This new opportunity is being pursued in response to changes in battery supply chain dynamics and in-depth discussions with potential offtake partners.
Recent successful laboratory scale testing has demonstrated arsenic removal from ICP ore concentrates by conventional roasting methods. Additional pilot level testing continues on this process with the results to be included in the optimized FS. These successful results support the Company’s new direction to produce a clean (low arsenic content) cobalt concentrate product, an upstream precursor material for battery cathode production.
Results of an updated in resource model was announced on February 7, 2018 based on results from a three-hole, 5,000 foot drill program completed in 2017, and the creation of a new three-dimensional resource model using current state of practice software and geostatistical tools. Compared to the September 27, 2017 FS on file, the total Measured and Indicated resources increased to 3.87 million tons at 0.59% Co, compared to 3.44 million tons at 0.59% Co and Inferred resources increased to 1.82 million tons at 0.46% Co from 1.54 million tons at 0.50% Co.
These optimization efforts have the potential to result in a significant improvement in economics for the ICP.
