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First Cobalt (TSX-V: FCC) CEO Trent Mell on His Busy Summer: Merger, Cobalt Enthusiasm, and Drilling at Keeley-Frontier

August 31, 2017

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

Trent Mell: I am great, Gerardo. It's been a crazy summer, a great summer. But I couldn't ask for more.

Gerardo Del Real: Well it's been a very productive summer for you and the company. A lot of ground to cover. I think the most important place to start has to be with the merger with Cobalt One. Can you please give us the details and what the thought and strategy is moving forward?

Trent Mell: Sure. So the merger is basically First Cobalt taking over two other peers in a friendly transaction. So, my team will assume the management of Cobalt Tech, a Toronto Venture listed company CFK, as well as Cobalt One, formerly Equator, and that's CO1 on the Australian Stock Exchange. And so we're bringing that together. We're going to strengthen our board at the same time with the CEO of Cobalt One coming on the board along with their chairman, Paul Matesyk. One of our funders, Bob Cross, also coming on the board, so we're going to get a really, really strong board.

We're not adding to our G&A, so our overhead stays fixed. And we're going to create, probably will create, the largest company by market cap in the cobalt exploration sector worldwide. So great liquidity, good scale, and the underlying premise is to bring together almost 50% of the historic cobalt camp in Ontario, and lock up just a lot of prospective assets.

Gerardo Del Real: Excellent. Now I understand that you had several road shows recently and of course I know you're on the phone with analysts all the time. How has the deal been received? There just really isn't another vehicle for pure exposure to the cobalt space. It just doesn't exist right now. Has it been received well?

Trent Mell: It's been really well received, and what's interesting is when you look across the cobalt space, this is a sector of pure focus that's really only been around for a year. So in response to your electric vehicles now all of a sudden we're looking for cobalt instead of taking it as a byproduct, should it happen to be in the ground.

And so, that whole sector, there's got to be 50 plus cobalt players, and we all have very small market caps. And as a result they were often good retail investment opportunities but not good for institutions. And so when it comes to the bigger checks and some steady long term shareholders, that just wasn't there.

So our vision which was shared with Bob and I, and our vision, which was shared with Cobalt One and Paul Matesyk and his team, was we need scale. We need something that is investable, we want market cap, liquidity, and we've achieved that. And so in our marketing, we've been across North America, we've been through Europe, Hong Kong, Australia, and the appetite for institutional investors, big funds, big, big resource funds who typically wouldn't look at us even with our pro forma $150 Canadian million dollar market cap, has been phenomenal.

And so I think now that we've resumed trading, we were halted for a number of weeks, we're starting to see that buying take place in the market.

Gerardo Del Real: Excellent. Now, of course you were busy during the halt. I know that drilling at Keeley-Frontier, I believe it commenced on August the 8th if I'm not mistaken. How are things progressing there?

Trent Mell: Correct, correct. We're a few weeks into it now, and keep in mind we're a new company just getting set up, so everything from setting up a core logging facility and getting power to our site, to buying a saw, so the drilling is going really, really well. We're staffing up. We hired a senior guy to work under our VP of Exploration out of Goldcorp. He was running their program, their drill rig program in Ontario, their Borden project.

So all of that is staffing up. Drilling's gone well, we were on one shift doing about 50 meters a day. We've now added a second crew, so we're going day and night, doing 100 meters a day. And we're almost at a point we'll have our first assay. So I think in the next couple of weeks we'll start to see some results and we'll be fairly steady.

And we've got a two kilometer strike area that we're targeting with 7,000 meters. And about 1,500 meters now have been drilled, so stand by for some results coming out of that.

Gerardo Del Real: Excellent, excellent. Now can you tell me a bit, just some general thoughts on the cobalt space. You mentioned that there's a lot of interest in the space now. It's a lot of new energy in the sector. What are your general thoughts there, Trent?

Trent Mell: The premise for the interest in the cobalt mining and exploration space is really driven from electric vehicle market. We know that cobalt is a key component, in fact by value cobalt is now more important than the other metals including lithium, so lithium ion battery has more cobalt than lithium in it.

And so, when you get to the supply side and you recognize that we're only at a 1% vehicle penetration rate for EVs around the world, where is it going to come from? And thus far it's been a byproduct of copper mines and nickel mines. And they definitely drive economic decisions. So as we look to where it's going to be found, I think as miners we're going to find more.

I think there's really lots of opportunity to find more in Canada and the U.S. We haven't ever looked at it as a primary focus, but we are setting ourselves up for a 5, 6 year deficit situation, or longer. So, while we look for more, and bring more production on stream, I think we're going to enjoy a period of high prices. That's only going to help fund our exploration and development activities.

And there aren't too many ways to play it. So being in a brownfield camp with known mining, known deposits, historic operations, I think sets up well to be first out of the gate with new supply.

Gerardo Del Real: Well you've certainly put together an impressive team. I know you had completed a financing in mid-May for approximately $1.2 million. How is the treasury looking?

Trent Mell: Treasury's looking great. I'm not taking a salary and our corporate G&A's pretty light. Almost all of our money's going in the ground. So with this transaction, we're eliminating two management teams, two head office overheads, lawyers and filing fees and all that stuff. And so when it's all said and done, we close the transaction, we're probably going to have about $3 million in the bank. December 1 is when we finally bring all three together.

And that's enough to carry us well into the first quarter. So my intention is to let the stock trade. We were halted during a review period which is normal when you do a transaction of this size. So we came back onto the market on Monday. And we're enjoying liquidity unlike any other player. We're by far the most liquid cobalt player on the planet, so we're going to let the stock settle in the market, and let our new interested buyers find their way in the secondary market.

Money is good, so that means we don't need to create a financing overhang until sometime next year.

Gerardo Del Real: Excellent, excellent. Lastly, Trent, what can we expect here in the last quarter of the year as we come out of the summer doldrums and into September?

Trent Mell: Well we've done a lot of the ground work in terms of building a team, getting the money in the door, and of course doing a bunch of really important transactions, both bringing together a strong team and assets. In tandem with that, our exploration team has been very active in laying out basically the foundations to a smart drill program. So looking at historic data, building a 3D model of the past mining operations, mapping, trenching, trying to understand the structural geology up there, because this is a camp that hasn't seen exploration in 50 plus years.

And having done all that, now the drilling is coming. And that's what the market wants to see, as important as all this other stuff is, investors want to see drill results. And so as we head into the last quarter, you're going to see a pretty steady stream of updates on assays. We've also got a secondary part of our strategy, which is looking at all of these historic stock pile material throughout the camp to see if there's some early cash flow opportunities from that, and we'll start to make our strategy clear on that in the next matter of weeks or month or so.

Gerardo Del Real: Excellent. Well, Trent, exciting times. Congratulations on the deal. I know you were very, very busy behind the scenes putting that together. And I hope to have you back on soon. I want to thank you for your time because I know you're on the road, so thanks again.

Trent Mell: My pleasure, hope to talk soon.

Gerardo Del Real: Take care.

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