RCKS talk

Thursday, December 07, 2017 Derek Macpherson

eCobalt Optimization Should Reduce Costs


Download Report

eCobalt Solutions (TSX:ECS) announced an update on the progress its made in optimizing the Idaho Cobalt Project (ICP). The company has decided to take a new direction with its cobalt product and is expected to produce a clean (low arsenic) cobalt concentrate that is expected to reduce capital and operating costs at the company’s Cobalt operating facility. This new direction has followed changes in battery supply chain dynamics and in-depth discussions with potential offtake partners.


eCobalt to produce clean cobalt concentrate. Initial plans for the company included the production of cobalt sulphate, however, a clean cobalt concentrate has been found to allow the fastest route to production, generation of cash-flows and reduction of costs and technical risk to the project. The change has the potential to reduce both operating and capital costs. We note that of the US$187 million outlined in the feasibility study, US$124 million was for the cobalt processing facility. Additionally, 34% of the direct operating costs are related to cobalt processing facility. As such, the shift to producing a clean cobalt concentrate, versus cobalt sulphate have the potential to benefit project economics.

Further drilling confirms mineralization. As per the company’s resource and reserve optimization, the company stated that the three-hole, 5,000-foot drill program is on schedule. It was also indicated that all three holes intersected mineralized zones in the feasibility study and are expected to make a positive impact on the company’s resource model. The company is also in progress of drilling a fourth hole to provide rock mass data and acquire additional mineralized material for metallurgical testing and detailed engineering. The assays are pending and are expected to be released in an updated resource model in Q1 2018.

Cobalt market fundamentals improving ICP economics. The company also highlighted that based on today’s LME cobalt price of US$30.00/lb (Co-99.3%), the project’s after tax NPV (7.5% discount rate) and IRR per the feasibility study is US$183 million and 25.5%, respectively. We continue to believe eCobalt is well-positioned in the improving cobalt market to take advantage of rising prices, as the demand for electric vehicles and lithium-ion batteries grows. The project’s location in the U.S., places it in a mining friendly jurisdiction with low political risks. We view eCobalt as one of the few companies positioned to meet the near-term increase in cobalt demand, taking advantage of the current upswing in metal prices.


Derek Macpherson | VP Mining Analysis
Victoria Ellis Hayes | Associate
Alex Pitcher | Associate
 
Red Cloud Klondike Strike Inc.
105 King Street East, 2nd Floor
Toronto ON, M5C 1G6

Priced as of prior trading day's market close, EST (unless otherwise noted).
All values in USD unless otherwise noted.

Disclaimer
Red Cloud Klondike Strike Inc. is registered as an Exempt Market Dealer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, and the Yukon. Part of Red Cloud Klondike Strike Inc.'s business is to connect mining companies with suitable investors that qualify under available regulatory exemptions (the "Red Cloud KS Business"). Red Cloud Klondike Strike Inc., its affiliates and associates, and their respective officers, directors, representatives, researchers and members of their families (collectively, "Red Cloud KS") may hold positions in the companies mentioned in this publication and may buy or sell, or buy and sell their securities or securities of the same class on the market or otherwise. Additionally, Red Cloud KS may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services.
Red Cloud KS has prepared this publication for general information purposes only, NOT as part of the Red Cloud KS Business. This publication should not be considered a solicitation to purchase or sell securities or a recommendation to buy or sell securities. The information provided by Red Cloud KS for the purposes of this publication has been derived from sources believed to be accurate, but cannot be guaranteed. Opinions or analysis contained in this publication may be subject to change and Red Cloud KS does not undertake to advise the reader of such changes. This publication does NOT take into account the particular investment objectives, financial situations, or needs of individual recipients and other issues (e.g. prohibitions to investments due to law, jurisdiction issues, etc.) which may exist for certain persons. Recipients should rely on their own investigations and take their own professional advice before investment. Red Cloud KS will not treat recipients of this publication as customers or clients by virtue of having viewed this report.

Company Specific Disclosure Details
eCobalt Solutions Inc. - TSX:ECS - 1,2,3,4

1) A member of Red Cloud KS team has visited/viewed material operations of the issuer.
2) In the last 12 months, Red Cloud KS has been retained under a service or advisory agreement by the subject issuer.
3) In the last 12 months, Red Cloud KS has received compensation for investment banking services.
4) Red Cloud KS or a member of the Red Cloud KS team or household, has a long position in the shares and/or the options of the subject issuer.
5) Red Cloud KS or a member of the Red Cloud KS team or household, has a short position in the shares and/or the options of the subject issuer.
6) Red Cloud KS or a member of the Red Cloud KS team own more than 1% of any class of common equity of the subject issuer.
7) A member of Red Cloud KS team or a member’s household serves as a Director or Officer or Advisory Board Member of the subject issuer.

SUBSCRIBE TO HEAR FROM US

Gain access to exclusive mining industry research reports as well as additional mining industry information, promotional materials, press releases and news.

RCKS Talk Daily Analysis
RCKS News
LATEST POST
CATEGORIES
RELATED TAGS
ARCHIVES

 

RISK WARNING:

Red Cloud Klondike Strike Inc. is registered as an Exempt Market Dealer (EMD) in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, and Yukon.

 

By accessing this website you agree to be bound by our Terms of Use and Privacy Policy.

 

Red Cloud Klondike Strike Inc. connects mining companies with suitable investors that qualify under available regulatory exemptions. For example, in Canada, according to National Instrument 45-106, Prospectus and Registration Exemptions. Similar laws and regulations apply in other jurisdictions. Companies presented on this website are considered to be highly speculative and, as such, are suitable only for purchasers who can tolerate the highest level of risk including the loss of their entire investment.

© Copyright 2017 Red Cloud Klondike Strike Inc. All rights reserved.