Categories: Energy
Topics: General Energy

First Cobalt (TSX-V: FCC) CEO Trent Mell Talks US Cobalt Acquisition & Building a Clean Cobalt Supply Chain in North America

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 this afternoon?

Trent Mell: I'm doing just great, Gerardo. Thanks very much for having me again.

Gerardo Del Real: Well, thank you for coming out on such short notice. You had big news today, so I've got to congratulate you and the team. You announced the friendly acquisition of US Cobalt, which fits, obviously, perfectly with the strategy of First Cobalt to continue being a leading, non-DRC cobalt company. Every day it seems the importance of diversifying away from DRC cobalt is more and more obvious. Can you please go over the highlights of the transaction?

Trent Mell: Sure. Thank you. We did a three-way merger to consolidate the Canadian Cobalt Camp last year. Before that deal was even done, back last November of ‘17, we were already looking to what's next. We've got half of a mining district, with 50 past-producing mines now under our control, but we need to diversify the portfolio and where are we going to look? Top of our list was Idaho for three reasons.

One, is it's in North America. So it continues that theme of low jurisdictional risk, Canada-US. The second reason is, geologically, in addition to Ontario, we really like Idaho. It's a geology that's really easy to understand. It's been mined in the past, et cetera. Thirdly, by doing something here on the continent, it allows us to bring our refining capabilities, our refinery back into focus, and hopefully we activate that much sooner. This couldn't have been a better deal for us. It fit bang-on with what we had set out to do, and I couldn't be more pleased with where we've landed.

Gerardo Del Real: Well, you mentioned the refinery, and I think it's important to stress the fact that you have the only permitted cobalt refinery in North America that's capable of producing battery materials. The bottom line is, everybody can see the shortage of cobalt that's developed, and frankly, there's not a lot of companies that are doing any work to really diversify from DRC supply. Do you think that's accurate?

Trent Mell: Yeah, I think you're bang-on. I think the hub that we all know too well is you mine it in the DRC and then you refine it in China. One of the problems that creates for Apple and Samsung and Tesla is if you're buying from a Chinese refinery, you don't yet have real comfort as to where your supply is coming from. Is it, for lack of a better term, is it clean cobalt?

If we can mine it and refine it here in North America, and then sell it back to Detroit, or the Gigafactory, or to Apple, then you've got a real nice supply chain and a lot of comfort that what is being mined is being mined in an ethical fashion and that there's no instances of unfair labor practices, or worse, of child labor and the like. It's a theme we want to continue pushing, and our refinery's the only asset that's permitted to do that.

Permitting an asset like that these days is years of work, and we're real happy to have it, and we'd love nothing more than to find a deposit that could cause us to get that refinery up and running again.

Gerardo Del Real: Now, I understand that the acquisition now will also allow for another catalyst, which is going to be a maiden resource estimate expected later this year. Is that correct, Trent?

Trent Mell: Yeah, that's correct. The assets we have in Ontario are very prospective, but we've got some work to do. We won't have a resource this year. Hopeful we will next year. The team at US Cobalt has done just a fabulous job. They got into a property that had a historic resource, so non-compliant with today's standards. But yet as a miner, you can get comfortable that it's probably there. They went in, they drilled that out, and from what I can see, not only have they drilled it out, I think they've shown a lot of upside. I think they've shown that it's likely bigger than the historical numbers. We see a real opportunity to significantly grow beyond that.

We were on site last week to do our field visit with our geologists and engineers, and I think from what we saw in the core, going underground and looking at the work they're doing, they've got a top-notch team. The idea is let's bring them together. We've got a great balance sheet and some team members of our own we contribute, but let's keep them going, because they're going to have a resource sometime this year, sooner than later. I think once that's done you can start to work on an economic analysis of what a mine might look like there.

Gerardo Del Real: Trent, you have a very good understanding of the capital markets. I have to believe that this is going to encourage institutional shareholders to really take a deeper look at the company, if they haven't already.

Trent Mell: Yeah, I hope so. We've got some great retail supporters, which you need, but we've been fortunate. We've graduated to a strong institutional base fairly early. We were only a year old, keep in mind, and within six months, we started to get some funds. But, a lot of those were Asian, Hong Kong specifically, and Australian funds. European funds are starting to wake up. North America, I haven't seen that yet. My hope is by being in the States and having a real asset there, and then something that's a little bit more advanced, that maybe we can continue to grow the asset base in London and New York and elsewhere.

Gerardo Del Real: Excellent. Trent, thank you again for your time today. Congratulations, and hopefully we have you back on soon. I know you expect a very, very busy 2018.

Trent Mell: Yeah, very much. Thank you so much.

Gerardo Del Real: Thanks, Trent.