Part of the Stock Digest group of websites: Visit Tech Stock Digest  

First Cobalt (TSX-V: FCC) CEO Trent Mell on Release of Inferred Mineral Resource at Iron Creek & Addition of Henrik Fisker to the Board

September 27, 2018

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of First Cobalt (TSX-V: FCC)(OTC: FTSSF), Mr. Trent Mell. Trent, how are you this morning?

Trent Mell: Hey, Gerardo. Very, very well. Good to hear from you again.

Gerardo Del Real: Listen, a couple pieces of news. You added to your board just this morning, but I want to start off with the big news from yesterday. You announced an inferred mineral resource for your Iron Creek project in Idaho. A lot of interesting tidbits. Just doing some quick calculations, you have about $1.7 billion now in the inferred category, in copper and cobalt. I want to start by asking where your market cap is, and then I want to get into the details of this maiden resource here.

Trent Mell: Sure. Yeah, market cap, we're sitting at about $130 million today day with about $15 million in the bank. We're in good shape, but certainly, as you point out, a lot, a lot of metal in the ground there at Iron Creek. Yesterday's announcement was just the market's first opportunity to get a glimpse of what we're seeing thus far and there's more to come.

Gerardo Del Real: Let's talk about the numbers, the inferred mineral resource estimate is 29.6 million tons of 0.11% cobalt equivalent I should say. Now, there's a lot of details that bear getting into and diving into. You actually have a couple of different scenarios here that I believe were requested by MDA. So I'd love for you to touch on those details and just kind of go over some of the numbers here, Trent.

Trent Mell: Yeah, sure. So, when we got into this process, of course, we acquired U.S. Cobalt earlier in the year, closed that in June, and we were in the middle of a drill campaign. So we brought in our balance sheet, kept it going, and we asked MDA out of Reno, Nevada to prepare an estimate of the resources on an inferred basis for what we believed would be an underground mine, a potential underground mine. And what they came back with was yeah, we have an underground scenario, but their base case was, in fact, an open pit, which took us by surprise.

Pits, the advantage of that is you get more mineralization, in fact it's more than 2X the mineral endowment when you start looking at a pit versus an underground. Took us by surprise because like our neighbors, we got a neighbor to the north of us, eCobalt Solutions, underground only. We thought we would be going down that same path, but in this case Mother Nature dictates how these things go and when you start modeling it, we call it a pit shell around this thing, it wants to come to surface. Mineralization does come to surface.

It's where you would have the bulk of the mineralization in an open pit, and the bulk, the rest of it's in an underground fashion, and this is of course subject to, these are just mineral resources at this point. A lot of economics and studies need to back this up. But if we don't do that, we've got good optionality to keep this underground only, tighter footprint and higher grade. Over the next little while a lot more drilling to do. We're going to double the strike lengths, mineralization of the next six months. Actually less than that, five months, and see where it brings us.

Gerardo Del Real: And you're drilling now, if I'm not mistaken. Is that correct, Trent?

Trent Mell: That's right. We've got a 70-hole drill program under way. 30,000 meters. Ten of those holes we managed to sneak in to this last resource update. The initial resource covers, about 500 meters, a little under that, of mineralized and strike length. We're going to almost double that here between now and call it April 1. And so the drill campaign that is currently under way, we've got a third rig that's coming, and hopefully a fourth behind that, they've going to support an estimate over a footprint that's twice the size of the current one.

Gerardo Del Real: And you mentioned that the resource is open a long strike to the east and west and as well at depth. Correct?

Trent Mell: Yeah, we started to give a little bit of a heads up before this resource went out. You'll see more in the next couple of weeks. We had drill results that are east and west of the current mineralized area and we're drilling below. I was looking at some core a few days ago below the current resource area. In our business we like to say, "Open in all directions." Always good news when you can say that mineralization has not cut off. We've got to bring that to market, and I think the early indications are going to come very soon by way of an update. But we know from historic records and our own workings that this mineralization does continue for some 900 meters.

Gerardo Del Real: Excellent. I mentioned that the resource has about 45 million pounds of cobalt, about 175 million pounds of copper. What's the metallurgy look like, because you can have the prettiest rock in the world and it's not going to be worth anything if you can't actually extract the metal, right?

Trent Mell: Yeah, you got it. You need to find the mineralization, you need to have enough, high enough grade in tons. But you're right. At the end of the day the metallurgical recoveries are crucial. We’ve just done some preliminary flotation, or rougher flotation work on it, as we describe it. And thus far indications are really good. We're looking at about a 96% recovery on three bulk samples with the cobalt. 95% in the copper. We're going follow that up, the copper concentrate looks like it could saleable right off of the project. And then further upgrading for the cobalt. So, yeah, I think we've answered the initial question of knowing there's mineralization there, can we extract it from the rock? And we can.

Another feature here, which is pretty unique from all of the other known cobalt plays in North America, is that we don't have the arsenic association. A lot of the cobalt on this continent is associated with an arsenic mineral, and you need to extract the cobalt from that. In our case, we're dealing with pyrite. And pyrite, these tests indicate fairly easy to separate. And it gives you a nice saleable material that wouldn't require further upgrade if you wanted to sell it at that point rather than take it to a final product.

Gerardo Del Real: That's a big deal because that's going to offer some processing and possibly some offtake advantages, right?

Trent Mell: You got it. Yeah. I think in terms of partnering, for instance, one of the ways, the preferred way of junior miners to raise money is always issue more equity, but as the shareholder, you have to watch that, because at the end of the day, if you don't do it at the right time, or in an orderly fashion, you're going to dilute your shareholders and we all lose. So if you've got a good saleable concentrate, give you an opportunity to partner up with for instance a battery maker, that metal trader, even an auto company, and you can use that as an opportunity to bring capital in the door faster, and minimize the dilution of your shareholders.

Gerardo Del Real: Fantastic. So the last point, and then I'll pivot here in just a second. This project is based in Idaho, which is rapidly emerging as one of the go-to jurisdictions for mining, in not just the U.S., but pretty much anywhere. How has it been thus far working in Idaho and working with the company there?

Trent Mell: You know, it's been good. Idaho is a beautiful jurisdiction. You've got mining there going back to a gold rush 150 years ago. There's a tradition here of mining. Gold initially. We of course know it today a lot for silver and phosphates. We know there's a lot of cobalt there, and we haven't seen mining of cobalt since the ‘60s, but I do think it's going to come back.

Our congressman, Mike Simpson, has been a great ally. The state has made it very clear that they're open for mining. I've even had, frankly, conversations with the White House. So even at the federal level, people care about cobalt. It's a critical mineral, America needs it, we've got it on our property, and I'm getting a lot of offers of support from both levels of government to help bring cobalt back to America because, as we know today, it's coming out of the DRC and being refined in China. For security interests of America, both defense and economic, we need to move this forward, and I think people understand that.

Gerardo Del Real: Speaking of support, you just added a name to your board of directors that's pretty well known in the business and brings a lot of intellectual capital. Can we talk about that announcement this morning, Trent?

Trent Mell: Yeah, I'm really excited. Henrik Fisker, he is an auto entrepreneur, he's a visionary. He came out with the Karma automobile, a hybrid, a number of years ago, and Fisker Inc., the new company is going to be added here very soon. I think you're going to probably see him launch in the next couple years. It's grand. In the next couple of years he's looking at launching a new line of EV only automobiles, and so Henrik is going to be joining our board.

What's exciting with him is it just broadens the nature of the discussion around the boardroom table, instead of adding a mine engineer or a geologist or metallurgist, I'm bringing truly a remarkable visionary who is connected to the auto industry.

He understands tech, he understands the electric vehicle space, and all of those things combined are going to make us stronger. And he brings a whole network of people, frankly, that I can't tap today. It's going to be a lot of fun to work with Henrik and his spouse Dr. Geeta Fisker, and his team. He's the director, but I think through that we're going to be able to leverage some interesting connections to get our story out, but also help advance our strategy.

Gerardo Del Real: Well I have to believe some of those connections are going to be looking for stable sources of cobalt and copper.

Trent Mell: Yes. Absolutely, yeah. Here's an individual who's heading up Fisker Inc., they're working on a solid state battery, they're working on electric vehicles. He understands that you can't take cobalt out of electric vehicles for the foreseeable future, this gives him a front row seat if you will on our supply and our strategy. He can help us, and maybe we can help him one day as well.

Gerardo Del Real: Fantastic. Trent, anything else that you'd like to add? I appreciate the time you took today for the update.

Trent Mell: Yeah, maybe the last thing I would add is, it's been a tough market and in this business, people who invest in mining know that the fortunes of miners are going to come and go with the commodity price. The last five months, six months in the cobalt market, and therefore in the cobalt equities have been really tough. Traditionally we're entering what should be a strong purchasing season out of China for cobalt and cobalt sulfates, so I'm encouraged.

It feels like we've hit the bottom, I know for those people that have been invested in us it's been a difficult summer, but we've got a lot of good news ahead. Not just this resource, but more to follow, Henrik, et cetera. So bear with us, I think our future looks pretty bright.

Gerardo Del Real: And you mentioned you had $15 million in the treasury, correct?

Trent Mell: That's correct. Yeah, we're well-financed through not just the balance of ‘18, but we could make our treasury last through all of ‘19 if needed. Of course, it would also be good to accelerate activities, so we'll balance that out. But we don't need to do any more acquisitions, we're in no need for capital in the near term. No risk of dilution, we can let the stock appreciate hopefully in the market as we keep hitting the milestones, and we'll continue to grow.

Gerardo Del Real: Fantastic. Trent, thank you so much for your time, I appreciate it.

Trent Mell: Alright thanks, Gerardo. Have a great day.

View Interview Archive

Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.

MARKET SUMMARY

INDICES

Name Last Change
DOW 25340.00 1.13%
S&P 500 2767.13 1.40%
NASDAQ 7496.89 2.24%
TSX 15414.29 0.63%
TSX-V 698.60 0.00%

Resource Commodities

Name Last Change
Gold 1229.70 0.88%
Silver 14.72 0.75%
Copper 2.79 0.000
Platinum 846.50 0.41%
Oil 71.34 0.52%
Natural Gas 3.16 1.93%
Uranium 27.58 0.00%
Zinc 1.21 0.00%

@RSDigest ON TWITTER

Part of the Stock Digest family of websites
Small Cap Stock Digest