One of the mining sector’s biggest winners this week was a Toronto-based cobalt company which announced they had successfully produced a high-grade, extremely in-demand variant of cobalt. First Cobalt Corp (CVE: FFC) jumped almost 40 percent today as it announced it had succeeded in creating battery grade cobalt sulphate at its Ontario location.
The company had originally started testing small, single batches to see whether they could match product specifications required in the use of electric batteries. Their refinery has the potential to produce up to 2,000 tonnes of cobalt annually. Even for a relatively small company, the announcement was important for the global cobalt market, which is expected to see demand eclipse supply sometime in 2021 with much of this demand being driven by passenger EV’s and consumer electronics.
“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,” said Trent Mell, President and CEO of First Cobalt. “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.
First Cobalt added that their cobalt production ended up achieving over 99.9 percent purity. The company also wants to recommission North America’s only licensed cobalt refinery, which isn’t active at the moment and is in talks with other companies involved in the cobalt supply chain to get this facility operating again.
“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,” added Director and Chairman Henrik Fisker.”
Overall, the price of cobalt has fallen drastically over the past three years after reaching $90,000 per tonne. Currently, cobalt now trades around a third of that level at $32,000 per tonne. As a precious metal with a variety of industrially appealing properties such as a high melting point, cobalt is a highly in demand substance, with many expecting these drastic price declines to reverse in the coming future.
Shares of First Cobalt jumped 38.7 percent in response to this announcement as shares jumped C$0.06 to C$0.22 per share. Well in the penny stock range, shares of First Cobalt have been steadily declining over the past year, dropping from around C$1.00 to its current level today.