Trader Trafigura in talks with Congo over financing cobalt buyer

Trading house Trafigura Group is in talks with the Democratic Republic of Congo about financing a new state-controlled company that will buy all the African nation’s hand-mined cobalt. Entreprise Generale du Cobalt will need $80-million to $100-million to begin buying cobalt from so-called artisanal miners, according to people familiar with the matter, who asked not to be named because the negotiations are private. Mines Minister Willy Kitobo Samsoni said last week that hand-dug metal accounts for a fifth of cobalt output in Congo, the world’s biggest producer of the essential ingredient in lithium-ion batteries for electric vehicles.

Congo’s new artisanal cobalt monopoly could seek private partner – Minister

A new state company set up by the Democratic Republic of Congo to manage the country's artisanally mined cobalt could seek a private partner if the state does not have the funds to purchase all production, the mines minister said. DRC produces about 60% of the world's cobalt. Most of that is extracted by industrial operators like Glencore and China Molybdenum, with artisanal miners accounting for about a quarter of output.

First Cobalt upsizes placement, stock jumps

Toronto-headquartered cobalt company First Cobalt has upsized its previously announced nonbrokered private placement to accommodate demand. The offering increased from 10 715 000 units at C$0.14 a share, for gross proceeds of up to C$1-5-million, to 14 300 000 units at the same price, for C$2-million in proceeds. The offering is expected to close on February 5, First Cobalt said in a statement on Friday. The company’s stock jumped 7% to C$0.15 a share.

DRC aims for control of artisanal cobalt supply

By Peter Kennedy

The Democratic Republic of Congo has granted a monopoly to a new state-owned company that is being set up to buy and market all cobalt in the country that is not mined industrially.

According to a Reuters report, the move is a bid to control the entire artisanal supply chain and boost government revenue through control of prices. Another aim is to exert greater state oversight of working conditions in the artisanal sector, which has been plagued by instances of child labour and other abuses.

That has prompted a number of mining and exploration companies in Canada to try and capitalize on the DRC’s image problem by developing projects in North America. They include companies like Fortune Minerals Ltd. [FT-TSX], Canada Cobalt Works Inc., [CCW-TSXV], and First Cobalt Corp [FCC-TSXV, ASX; FTSSF-OTCQB].

Cobalt, with the exception of silver-cobalt ores from the Cobalt Mining Camp in northeast Ontario, is produced primarily as a by-product of copper and nickel and plays a key role in the production of rechargeable batteries used in the manufacture of electric vehicles and electronic devices.

Roughly 60% of the world’s cobalt supply comes from the DRC. Industrial mining accounts for approximately 80-85% of Congolese cobalt production, with artisanal mining operations producing the remaining 15-20%.

However, companies aiming to source cobalt through artisanal mines in the DRC face challenges in the areas of environment, health and safety, and human rights, according to auto giant BMW Group.

Back in November, 2018, BMW Group said it was teaming up with BASF SE, Samsung SDI and Samsung Electronics to launch a cobalt pilot project in the Democratic Republic of Congo (DRC) in a bid to improve working conditions in artisanal mining operations as well as living conditions in surrounding communities.

Amnesty International has warned electric car companies and other consumers to seek out alternatives to the DRC, which is renowned for its mineral wealth, but also civil wars, corruption and poor working conditions in mines.

A report released by Amnesty International in November, 2017 ranked industry giants including Apple, Samsung Electronics, Dell, Microsoft, BMW, Renault and Tesla on how much they have improved their cobalt sourcing practices since January, 2016.

The report, titled Time to Recharge, found that while a handful of companies had made progress, others were still failing to take even basic steps like investigating supply links in the DRC.

“Our initial investigations found that cobalt mined by children and adults in horrendous conditions in the DRC is entering the supply chains of some of the biggest brands,” said Seema Joshi, Head of Business and Human Rights at Amnesty International.

Pressure from Amnesty International presents a big challenge for industrial consumers because so much of world’s cobalt supply comes from the DRC.

In addition to concerns about working conditions, the DRC has also been hit by falling cobalt prices, which are trading at US$14.74 a pound, or about a third of their 2018 peak.

The Reuters report said the new state-owned DRC purchasing entity is called Enterprise Generale du Cobalt. It is not clear when this new entity will be up and running.

First Cobalt raising $2 million for Ontario refinery

First Cobalt Corp. [FCC-TSXV, ASX; FTSSF-OTCQB], a company that is backed by Swiss commodities trader Glencore AG, said Friday January 31 that it has increased the size of a previously announced non-brokered private placement to accommodate demand. It said the offering has been increased to 14.3 million units at 14 cents each for gross proceeds of $2 million.

First Cobalt is the largest land owner in the historic Cobalt, Ontario region. The company controls over 10,000 hectares of prospective land and 50 historic mines as well as a mill and a facility that it has described as the only permitted cobalt refinery in North America capable of producing battery metals.

Its Kerr Lake area properties include the past producing Juno, Drummond, Kerr Lake, Lawson and Conisil mines, all of which operated primarily as silver mines.

Glencore AG recently agreed provide a US$5 million loan to fund the recommissioning of the company’s Ontario cobalt refinery, which could produce over 25,000 tonnes of cobalt sulphate annually from third party feed, First Cobalt has said.

Upon completion of a positive definitive feasibility study for a 55-tonnes-per day refinery expansion in the first quarter of 2020, and subject other terms and conditions, Glencore is prepared to advance an additional US$40 million to recommission and expand the refinery, said First Cobalt in an August 26, 2019 press release.

Meanwhile, under the terms of the upsized offering, each unit will consist of one common share of First Cobalt and one common share purchase warrant. Each warrant will entitle the holder to purchase one additional common share at 21 cents for a period of two years.

Proceeds of the offering will be used by the company to fund the advancement of the refinery as well as for general corporate purposes.

On Friday, First Cobalt shares rose 3.6% or $0.005 to 14.5 cents. The shares are currently trading in a 52-week range of 12 cents to 25 cents.

The warrants are subject to accelerated expiry if the closing price of the common shares is equal to or greater than 37 cents per share for a period of 10 consecutive days. In that case, the company will have the option, but not the obligation to accelerate the expiry to 20 calendar days from the date of notice.

First Cobalt enhanced its position as a pure-play North American cobalt company by acquiring all of the issued and outstanding shares of US Cobalt Inc. [USCO-TSXV; USCFF-OTCQB]. The acquisition positioned First Cobalt as a leading non-Democratic Republic of Congo (DRC) cobalt company with North American projects located in close proximity to infrastructure as well as electric vehicle and technology hubs such as Michigan and California.

The combined entity has projects in Ontario, and Idaho, which, once they reach the production stage, could be major cobalt suppliers for the electric vehicle market, which now depend mostly on supply from the DRC.

First Cobalt’s main cobalt exploration project is the Iron Creek cobalt project in Idaho. Iron Creek has an Indicated Resource of 2.2 million tonnes of 0.32% cobalt equivalent (0.26% cobalt and 0.61% copper, containing 12.3 million pounds of contained cobalt and 29 million pounds of copper.

On top of that is an Inferred Resource of 2.7 million tonnes at 0.28% cobalt equivalent (0.22% cobalt and 0.68% copper) containing 12.7 million pounds of contained cobalt and 40 million pounds of copper.

Congo moves to monopolise about 25% of all cobalt exports

The Democratic Republic of Congo, the world’s biggest producer of cobalt, created a State monopoly that will buy all output not extracted by industrial operators in a bid to exert more control over the price of the key ingredient in rechargeable batteries. The central African nation dominates output of the metal, accounting for more than 70% of the global market in 2018. While most Congolese cobalt comes from large, mechanised mines operated by companies including Glencore, artisanal miners can account for as much as a quarter of the nation’s output.

Lundin Mining achieves 2019 production targets

Lundin Mining Corp. [LUN-TSX; LUMI-Sweden] on Thursday January 23 released weaker-than-anticipated operating results in the fourth quarter of 2019, largely driven by lower grades at its Candelaria mine in Chile.

Lundin is a diversified Canadian base metals mining company with operations in Chile, the United States, Portugal, Sweden and Finland, primarily producing copper, nickel and zinc. Lundin also holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery in Kokkala Finland.

However, despite a somewhat softer end to the year, 2019 production guidance was achieved at every asset, and there were no changes to the company’s previously announced production forecasts.

On Thursday, Lundin shares eased 2.5% or 19 cents to $7.30 on volume of 2.5 million. The 52-week range for the shares is $5.47 and $8.08.

In the fourth quarter of 2019, attributable copper production of 59,000 tonnes was 8% below Scotiabank forecasts of 64,000 tonnes. This was largely a reflection of a weaker performance at Candelaria due to below mine plan head grades, and to a lesser extent, the performance of the Chapada copper-gold mine in Brazil.

Despite the softer fourth quarter operational results, total 2019 consolidated copper, zinc and nickel production of 235,000 tonnes, 152,000 tonnes and 13,500 tonnes all met or slightly exceeded the most recent annual guidance ranges of 227,000-245,000 tonnes, 149,000-157,000 tonnes and 12,000-15,000 tonnes respectively.

Lundin has recently said it anticipates strong growth in its metal production.

The company said copper production is expected to rise by over 20% in 2020 compare to 2019, with full year contributions from the Chapada copper-gold mine and Candelaria mining complex.

The company said zinc production is forecast to increase by over 15% in the same period while nickel production will jump by over 25%.

Lundin acquired a 100% interest in the Chapada copper-gold mine from Yamana Gold Inc. [YRI-TSX; AUY-NYSE] for US$800 million. A traditional open-pit truck and shovel operation, Chapada was previously expected to produce approximately 54,500 tonnes of copper and 100,000 ounces of gold this year (75,000 tonnes of copper equivalent) at a co-product cash cost of between US$1.60 and US$1.80 a pound for copper and US$430 per ounce for gold equivalent.

The three-year production outlook for Chapada is based on a NI 43-101 technical report that was filed on SEDAR on October 10, 2019. Copper production is forecast to be between 51,000 and 56,000 tonnes over the next three years based on the current 24 million tonne per-year throughput rate.

Chapada gold production is expected to be 70,000 to 95,000 ounces over the next three years, marking a significant increase in Lundin’s upstream gold output.

At Candelaria, copper production is expected to increase during the next two years, primarily on the back of improving copper head grades and as the benefits of reinvestment initiatives are realized.

Copper production there is forecast to average approximately 180,000 tonnes annually over the 10-year period from 2020 to 2029.

Meanwhile, after an expected increase of 25% next year, nickel production is expected to remain at this increased level over the three-year period as higher grade ore from the Eagle East mine in Michigan contributes to mill feed. Eagle is a 2,000 tonnes-per-day underground nickel-copper mine.

Additionally, the Neves-Corvo Zinc Expansion Project (ZEP) in Portugal is advancing on schedule for phased ramp-up in 2020. Following next year’s 15% rise, zinc production is forecast to increase by a further 30% in 2021, over 2020, with a full year contribution from ZEP.

Jervois ups Idaho cobalt estimate by 22%, stock advances

Jervois Mining Ltd. [JRV-TSXV, ASX; JRVMF-OTC; IHS-FSE] said Wednesday January 22 that it has increased the contained Measured Resource at its Idaho cobalt project by 22%.

Jervois shares advanced on the news, rising 5.3% or $0.01 to 20 cents. The shares are currently trading in a 52-week range of 13 cents and 24 cents.

Jervois is focused on becoming a global supplier in the emerging battery metals market. In keeping with that focus, the company swallowed eCobalt Solutions Inc. last year in a $57.6 million deal, a move that gave Jervois Mining access to eCobalt’s Idaho Cobalt Project, a high-grade cobalt deposit located in Idaho.

Idaho Cobalt Operations (ICO) is Jervois’ flagship primary cobalt deposit located in Idaho near the town of Salmon. Over the course of 20 years, approximately US$100 million has been invested in developing the mine.

It is fully environmentally permitted for ore processing capacity of up to 1,200 tons/day and has high cobalt and copper grades, with a gold by-product.

The ICO is located in the heart of the Idaho Cobalt Belt, a unique mineral rich, prolific metallogenic district unique to North America, which historically produced 2 million tons of contained cobalt between the early 1900s through to the 1960s.

The project consists of 243 contiguous unpatented lode mining claims and is situated in an area ranging in elevation from 6,100 feet to 8,100 feet. Vehicle access is via a series of public-access gravel roads.

The company said Measured and Indicated Resources at the site now stand at 5.2 million tonnes, grading 0.44% cobalt (50.1 million pounds), 0.69% copper (80.1 million pounds), 0.53 g/t gold (89,000 ounces). The estimate is based on a 0.15% cobalt cut-off.

Jervois said it updated the Measured Resource estimate after completing 3,125 metres of drilling in 19 holes to support its bankable feasibility study. The updated model uses modified methodology to improve estimation using industry standard applications for narrow orebodies, with Jervois also adopting a more appropriate approach to stope and mine plan design.

“This has involved block rotation and adoption of a smaller cell size than previously used, as the previous MRE released by eCobalt Solutions on February 7, 2018 was unrotated and used cell sizes not conducive to the narrow high-grade interzone intercepts found in the Main Ram Zone, the company said in a press release.

Jervois also said the bankable feasibility study remains on track for completion by the end of March 2020, with first concentrate production scheduled in the fourth quarter of 2021.

Cobalt is generally mined as a by-product of copper and nickel

“Battery demand for cobalt is expected to rise sharply, and ethical, non-Democratic Republic of Congo, low capital sources of supply outside the Idaho Cobalt Operations are essentially non-existent,” the company said.

Meanwhile, mine design and scheduling are progressing as is plant design, the company added.

In a separate development, Jervois also released an update on drilling at its Kilembe and Bujagali area properties in central and western Uganda following a partial receipt of confirmed assays from 2019 exploration.

Drilling at the Kilembe area properties targeted surficial gold copper mineralization detected through earlier geochemical programmes.  Drilling at Bujagali targeted the Waragi anomalies detected through earlier geochemical and geophysical anomalies with 1,740 metres completed.

The company said the latest drilling results and high-grade rock chip samples provide further encouragement to continue with the current exploration pace on the Ugandan projects for both copper-cobalt and copper-gold.