First Cobalt Produces Battery Grade Cobalt Sulfate

Highlights

• Product assayed 20.8% cobalt, surpassing the reference grade for sulfate pricing
• Product classified as “high purity”, achieving over 99.9% purity
• Test work carried out in single batches, offering ample opportunity to improve product specifications to meet offtake partner requirements through process optimization
• Potential to produce up to 2,000 tonnes of cobalt in product per annum as the process excluded use of autoclave circuit, allowing for increase in plant throughput
• Near term cash flow potential 18-24 months from sourcing of feedstock, milestone advances these negotiations, as well as offtake discussions

Trent Mell, President & Chief Executive Officer, commented:

“Producing a battery grade cobalt sulfate is one of our most significant accomplishments as the majority of refined cobalt for the electric vehicle market is produced in Asia. With no cobalt sulfate production in North America today, First Cobalt stands to become the first such producer for the American electric vehicle market.

“For our shareholders, this development brings us closer to cash flow and will be our top priority in the year ahead. Third party studies have confirmed that the permitted facility could be recommissioned in 18-24 months. Furthermore, the cobalt hydroxide used in these tests is currently sold at approximately 60% of the prevailing cobalt price which could offer good margin opportunities based on the findings of the previously released restart study.

“We are encouraged by the interest shown in this strategic asset by cobalt miners and EV companies alike and intend to move swiftly to secure long-term feed supply and offtake contracts. We are currently exploring a number of non-dilutive financing options for the capital requirements to restart the facility. We intend to have further updates on all aspects of the project over the next quarter as we complete these discussions.”

Henrik Fisker, First Cobalt Director and Chairman and CEO of Fisker Inc., also commented:

“Electric vehicle demand in North America will keep growing as companies such as Fisker Inc. continue to introduce new, affordable EV models to the market. Automakers and battery manufacturers have a responsibility to ensure any materials we use in our batteries are sourced in an ethical way. The First Cobalt team is dedicated to ensuring projects maintain the highest standards of ethical mining practices and environmental protection. The restart of the First Cobalt Refinery is an important step towards producing battery materials in America with a clean record from mine to machine.”

The First Cobalt Refinery is the only permitted primary cobalt refinery in North America and is ideally suited to treat North American arsenic-rich mine concentrate. Given the abundance of this higher grade material in the market, the Company has been testing third party cobalt hydroxide as an alternative source of feed.

Today’s results confirm that the existing processes in the First Cobalt Refinery are indeed capable of producing a high purity, battery grade cobalt sulfate.

SGS Canada was engaged to test cobalt hydroxide using the processes in the current refinery flowsheet to assess its suitability as feedstock (see November 8, 2018 press release). Tests simulated the existing circuits to determine the ability to produce a cobalt sulfate heptahydrate (“cobalt sulfate”), a critical component of lithium-ion batteries.

The current Refinery flowsheet includes an autoclave circuit as well as a number of solvent extraction (“SX”) lines for treating various elements, followed by product precipitation and filtration stages. Test work concludes that processing cobalt hydroxide feed would not require the reactivation of the Refinery’s autoclaves, providing an opportunity for higher production potential than projected in an independent study prepared by Primero Group. The cobalt hydroxide feed tested in this program had head grades in excess of 20% cobalt. By contrast, many other sources of cobalt hydroxide have head grades approaching 30% cobalt, providing yet another opportunity for higher production.

Commissioned in 1996, the refinery is located in Ontario, Canada, a few hours north by road or rail from the US border. Once operational, the Refinery would become the only North American producer of refined cobalt for the North American EV market.

Given the strong cash flow projections derived from the Primero Group study, the Company believes that a restart of the refinery could be financed by non-equity sources of capital, limiting dilution for shareholders and generating a steady source of cash flow to fund future activities at the flagship Iron Creek Project in Idaho, USA. The Company has received significant interest from miners and automotive companies and today’s results will allow these discussions to advance to the next stage. First Cobalt’s objective is secure a long term feed purchase agreement, offtake for the sale of refined cobalt and financing for the capital requirements. It is estimated that the refinery could be operational 18-24 months from the selection of a feed source.

The Company has engaged Ausenco, a global consulting, engineering, project delivery and asset operations, management and optimization solutions firm to the minerals & metals, oil & gas and industrial sectors to work in partnership with SGS Canada on this next phase. The next step towards a potential restart of the First Cobalt Refinery will include detailed engineering to assess further refinements to the flowsheet and circuit optimizations to maximize potential output.

First Cobalt Refinery

The First Cobalt Refinery is a hydrometallurgical cobalt refinery in the Canadian Cobalt Camp, approximately 600 kilometres from the U.S. border. The First Cobalt Refinery has the potential to produce either a cobalt sulfate for the lithium-ion battery market or cobalt metal for the North American aerospace industry or other industrial and military applications.

In late 2018, the Company released the results of three independent studies undertaken to estimate capital requirements, operating costs, permit renewal timelines, potential feedstock options and offtake opportunities. At a 24 tonne per day feed rate and using the current flowsheet, the capital cost of the restart is estimated at US$25.7M (including a 30% contingency) and a permitting review concluded that a restart is possible within 18 months of selecting a feedstock.

The Company is engaged in discussions with companies specializing in the marketing and sourcing of concentrates to secure sources of ethically produced cobalt as feedstock for the First Cobalt Refinery.

A corporate video featuring the First Cobalt Refinery in Ontario, Canada is available on the Company’s website at http://www.firstcobalt.com/investors/media-gallery/videos/.

A final decision on whether to put the Refinery back into production has not been made at this time and any decision is contingent on the outcome of the foregoing studies as well as the Company’s ability to source viable feedstock.

Refinery Restart Studies

On October 10, 2018, the Company announced the results of three studies supporting a restart of the First Cobalt Refinery. Primero Group, an Australian engineering firm with an office in Montreal, Canada, was engaged to conduct a desktop study to estimate the capital and operating costs to operate the First Cobalt Refinery in its current configuration at various throughput rates, available at www.firstcobalt.com/investors/downloads-and-filings.

As part of their study, Primero estimated the replacement value of the refinery building at various throughput rates, including the existing nameplate capacity of 24 tpd and an expansion scenario at 50 tpd. Primero’s results ranged from US$53M to US$143M, inclusive of a 30% contingency (see Table 1). In both instances, replacement estimates were limited to the refinery building and did not include site level infrastructure, including roadways, power lines and the tailings management facility. The value of the permits was also excluded for purposes of this exercise.

Please find more information in the attachement.