First Cobalt (FCC.V) has been quite active lately, and the company has now announced it has signed an LOI to form a strategic alliance in the Democratic Republic of Congo (‘DRC’). First Cobalt will pay C$600,000 in cash and issue 4.53 million shares, with an additional payment of US$1.58M due to the property owners which will allow First Cobalt to acquire an initial 70% stake in all seven properties which are the subject of the agreement. The owners of the remaining 30% will not be required to fund their pro rata part of the exploration programs and are essentially carried until a feasibility study has been publishes.
All seven properties are in close proximity to existing major copper-cobalt systems, and five of the properties form a cluster close to Lubumbashi, the most important city in the region. Whilst a move into the DRC might surprise some investors, it’s a move which makes a lot of sense. If one is really serious about securing a spot in the cobalt supply chain, the DRC remains a major hot spot for cobalt activities in the world. Of course, the geopolitical situation will always result in a higher discount applied on Congolese projects, but companies like Lundin Mining (LUN.TO), Freeport McMoRan (FCX), First Quantum Minerals (FM.TO, FQM.L), Glencore (GLEN.L) and Ivanhoe Mines (IVN.TO) show it’s definitely possible to work in the country.
It’s obviously also helpful First Cobalt also has non-DRC cobalt projects, and the company has recently announced a C$1M work program on its past-producing Keeley-Frontier cobalt-silver mine in Ontario. This exploration program will consist of 7,000 meters of drilling, of which 70% will be aimed at Keeley-Frontier, with the remaining 2,000 meters earmarked for regional exploration drilling.
This summer exploration program will provide First Cobalt with a lot of meaningful insight as the Keeley-Frontier mine (and district) hasn’t been the subject of any (serious) exploration efforts in the past several decades. And that’s a pity, as the project is absolutely located in the right spot considering the Silver Centre and Cobalt were the epicenter of the total production of 50 million pounds of cobalt and in excess of half a billion ounces of silver from dozens of different mines. Whilst we aren’t expecting the current drill program to confirm the historic grades (0.5% Cobalt and 58 ounces (!) of silver per tonne), it will allow us to get a pretty good idea of what’s in the ground there.
With the acquisition of the DRC projects, First Cobalt is developing its business strategy on two fronts. You can expect a more in-depth review from us shortly.