Historic cobalt production but never a focus. The historic Cobalt mining camp, despite its name, is famous for spectacularly high-grade silver deposits.
There are hundreds of mines in the camp, which had varying degrees of success; however, at many of these mines cobalt was produced as a by-product
but never pursued as a primary element because of lower value and limited payability when these mines were operating. From the company’s pro-forma
land package (Figure 1) more than 4.6 million pounds of cobalt was produced, along with over 74 million ounces of silver. While the historic cobalt
production was meaningful, the focus of historic operators was silver which drove mine plans and development, suggesting there remains cobalt left
to exploit in this premier jurisdiction.
Not looking for what was mined before. Historically, mining in this camp was from narrow high grade calcite-quartz veins hosting silver and cobalt
mineralization, but this is not what First Cobalt is looking for. First Cobalt believes that mineralization (especially cobalt as well as silver,
nickel and copper) extends beyond these discrete veins into the mafic volcanics; essentially as disseminated arsenides (and sulphides) hosted within
stockwork zones and fine fractures. Because of the historic focus on silver, little is understood in the camp with respect to controls of cobalt
mineralization in the camp but initial work by First Cobalt suggests that the company’s belief has merit. We note that despite historic cobalt
production, the cobalt exploration process is at an early stage and more work is needed.
Significant infrastructure already in this historic camp. Following the announced mergers, First Cobalt will own a permit 100 tpd mill (Figure 5) and
a refinery. We note that while the throughput at the refinery is unlikely to be of sufficient size to be useful, it comes with 40 acres of tailings
area (plus another 80 acres designated), permitted to hold tailings containing arsenic (Figure 6). Besides these important pieces of infrastructure,
the properties are all accessible by all-weather roads and both the mill and refinery already have power lines servicing them.
Historic “muck piles” provide medium-term opportunity, but also likely to provide valuable data. Spread across these past producing mines are a significant
number of muck piles, which we expect to be of value for the company (Figure 7). The company believes these could contain economic cobalt mineralization,
and is planning a sampling program on some of these piles. Should enough ore be found in these stockpiles, the company has the equipment and tailings
capacity to start a small operation. While this potential for small medium-term cash flow is unlikely to move the needle for investors, it should provide
the company valuable metallurgical and geologic information for future project development.
Unique attributes are likely to see First Cobalt trade at a premium to other cobalt exploration peers. Based on the current share price, the pro-forma
market cap would be ~C$120 million, which may seem steep for an exploration company at this stage. While First Cobalt from an exploration and resource
development perspective is at an early stage; the camp is not and is known to have economic cobalt grades along with significant infrastructure.
Uniquely, the pro-forma company’s assets, which includes a dominant land position in the camp, a tailings area permitted for arsenic, a 100 tpd
mill and small refinery, all of which have significant value. In our view, the company’s pending exploration results along with the completion
of the proposed mergers are likely to be important catalysts for the share price.
Site visit and note completed by Ed Thorose and Derek Macpherson.
Derek Macpherson | VP Mining Analysis
Victoria Ellis Hayes | Associate
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Company Specific Disclosure Details
First Cobalt Corp. - TSXV:FCC - 1
CobalTech Mining Inc. - TSXV:CSK - None
Cobalt One Limited - ASX: CO1 - None
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