First Cobalt Corp (ASX: FCC), a Canada-based metal and mining group, announced on 2nd May 2019 that the company acquired 9,640,500 common shares of eCobalt Solutions Inc by way of a private share purchase agreement. The acquisition of eCobalt’s common shares by the company represents approx. 6% of the issued and outstanding common shares at a price consideration of C$0.375 per common share, and it also represents the company’s entire interest in eCobalt.
As per the company, it acquired the common share for investment purposes and made it clear that the company can sell or acquire eCobalt’s shares in the future without further announcement, subject to applicable regulations. First Cobalt intends to issue 21,265,809 common share of the company for the exchange of the eCobalt’s share concerning the private share purchase agreement, with a price consideration of C$0.17. The issued common shares will be subjective to all necessary regulatory and stock exchange approbation, and it will also be subjective to a statutory to a hold period of four months and one day.
In a presentation announced by the company previously on 9th April 2019, First Cobalt mentioned that the vision of the company is to build an ethical North American cobalt supply chain for the American market.
The company hosts and operates a refinery at Ontario, Canada, which reportedly is an only primary cobalt refinery in North America and is a proven flowsheet for cobalt sulfate production as well. The company recently produced battery grade cobalt sulfate. Apart from being a refinery, the company’s key asset is the Iron Creek Project in Idaho, USA, which is a cobalt deposit on private property. Iron Creek project represents an outstanding cobalt project outside Africa with estimated Inferred Resources of 26.9 million tonnes with 0.11% of cobalt equivalent. The company recently extended the mineralisation at the prospect.
In the presentation the company emphasis on the global battery market and as per the company, as electric vehicle demand grows, the United States will become the second largest producer of batteries across the globe after China.
As per the company’s estimation, by 2021, refined cobalt supply may not meet the demand. The various projections of the future by the company are as:
The company is optimistic about the future demand of electric vehicle, and as per the company, after an initial rise till 2021, the refined supply would become stagnant while the demand for it is likely to surge.
Currently, China owns a significant portion of the refined cobalt supply, and the United States has no domestic supply of cobalt. China accounted for 58% of the global refined cobalt supply in 2017, and 80% of global cobalt chemical supply during the same year.
Certain market participants believe that the supply chain of the cobalt could get hampered amid the ethical issues in the world’s top cobalt producing nation- Democratic Republic of Congo (DRC). The DRC accounts for a substantial portion of cobalt and the uncertainty coupled with ethical issues such as child labour could hamper the operations of the companies operating in DRC, which in turn, could hamper the supply of cobalt in the international market.
In a nutshell, the company aims to build a supply line of cobalt in North America for the battery segment, which is currently trending in the global market, and is operating the projects and could come among the Australian cobalt miners, who can take advantage of DRC issues.
The share of the company was trading at A$0.170 (as on 2nd May 2019, AEST: 02: 44 PM), up by 6.25% as compared to its previous close.
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