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Cobalt Demand to Grow With Electric Vehicles and Smartphones

T.LAC, T.LUN

FinancialBuzz.com News Commentary

PR Newswire

NEW YORK, January 24, 2018 /PRNewswire/ --

According to S&P Global Platts, BMO Capital Markets indicates that Cobalt prices are likely to rise significantly in the next two years as the industry struggles to meet rising demand from batteries used in electric vehicles. The report projects that the annual average cobalt price peaking at $40.50/lb ($89,290 mt) in 2019. The cobalt market has to deal with a looming supply problem. BMO estimated that global cobalt mine supply was down about 2.7% in 2017, with "weakness at Glencore operations [Katanga] and disputes at GTL's Big Hill primary cobalt tailings operations." Yet, the investment bank explained that the cobalt rally is expected to continue with growth in smartphone sales, as Smartphone batteries are still the main end use market for cobalt. First Cobalt Corp. (OTC: FTSSF), FMC Corporation (NYSE: FMC), Lithium Americas Corp. (OTC: LACDF), Panasonic Corporation (OTC: PCRFY), Lundin Mining Corp. (OTC: LUNMF)

BMO also indicated China's continuously growing market for rechargeable batteries and its importance for the lithium and cobalt markets. China has revised their "E-bus subsidy policy" in recent years. The policy now prioritizes higher battery quality technologies, essentially penalizing LFP (lithium iron phosphate) and benefiting NMC (nickel manganese cobalt) battery technology. According to BMO, "Chinese battery manufacturers have scrambled to add cobalt-containing NMC capacity and also raw materials to fill these given expectations that equivalent quality-driven subsidies will be put in place for car batteries."

First Cobalt Corp. (OTCQB: FTSSF) is also listed on the TSX Venture Exchange under the ticker symbol 'FCC'. Just earlier today the company announced breaking news that, a research program to identify regional controls for cobalt-silver mineralization in the Cobalt Camp, Ontario. This is the latest of a series of initiatives to bring research and innovation into the 110-year old mining camp and will be conducted in partnership with the Mineral Exploration Research Centre at Laurentian University. Highlights:

  • Consolidation of the Cobalt Camp by First Cobalt allows for a comprehensive study of major structural features for the first time in the 110-year history of the Cobalt Camp
  • Will improve cobalt mineralization targeting, particularly in under-explored areas
  • Partnership with one of the largest mineral exploration research-teaching clusters in the world, the Mineral Exploration Research Centre (MERC) at Laurentian University in Sudbury Ontario
  • Regional field mapping program by MERC in the spring will augment data collected by the Company
  • Regional 3D geological modeling continues, including integration of field mapping and geochemical studies

Trent Mell, President & Chief Executive Officer, commented: "Structural controls on cobalt-silver mineralization in the Camp are poorly understood and initiatives like the one announced today allow us to improve our geological models and create shareholder value. Our commitment to research and innovation is underpinned by our conviction that this historic mining district can be revived more quickly by embracing innovation as a core element to our exploration strategy."

The Company is sponsoring a dedicated research program in partnership with the Mineral Exploration Research Centre at Laurentian University to determine regional controls of cobalt and silver mineralization in the Cobalt Camp. This is believed to be the first detailed study of major structural features in the 110-year history of the Cobalt Camp. Results of this program will be used to guide targeting for cobalt mineralization in under-explored areas. First Cobalt is the largest land holder in the Cobalt Camp, having consolidated 45% of the historic camp in 2017 including over 50 past-producing mines. Throughout the Camp's history there were approximately 100 mining operations, most of which were small underground silver mines. In 2017, First Cobalt demonstrated that cobalt occurs as different styles of mineralization, largely due to different geological settings. A key objective in 2018 is to test different mineralized areas throughout the Cobalt Camp to identify those with the best cobalt potential. The drill program that recently commenced at the Bellellen mine is in a different geologic setting from the Keeley and Frontier mines that were drilled during the fall of 2017.

Mineralization is considered to be characteristic of the Five Element Vein style of ore deposit model with analogues in Norway, Czech Republic and Morocco that are ascribed to hydromagmatic type geological processes. The genesis of these deposits is poorly understood, but in the Cobalt Camp the structural contrast between the rock types is a major control on regional and local-scale structures that are a principal factor to the distribution of the veining. 2017 field mapping and drilling recognized the influence of folds and associated fracturing in the host rocks where cobalt-silver veining occurs at both the local and regional scale. Additional field mapping by MERC and First Cobalt geoscientists will be completed this summer and representative samples will also be collected for geochemical and geochronological studies.

Results of these studies will be integrated with the results of geophysical surveys conducted during the Metal Earth research program led by MERC in the fall of 2017. Over 20km of seismic surveys were conducted in the Cobalt Camp in 2017 as part of the Metal Earth initiative and data processing is now underway (see October 19, 2017 press release). Magnetotelluric and gravity surveys are planned for 2018 to augment the geophysical datasets. The seismic survey data will provide views of the Earth's crust to a depth of 30km to reveal the predominant orientation of the host rocks and the major structures that control camp-scale mineralization. Structures that can be traceable to surface will be targeted for further exploration. This program will result in a 3D geological model for the entire Camp that will continue to be updated with future exploration and mining.

Panasonic Corporation (OTC: PCRFY) has positioned automotive lithium-ion batteries as one of its key businesses, and its automotive batteries are used by many automakers worldwide. On December 13, 2017, the company and Toyota Motor Corporation announced an agreement to begin studying the feasibility of a joint automotive prismatic battery business. This agreement between the two companies aims to help find solutions to pressing societal issues such as global warming, air pollution, the depletion of natural resources and energy security. Furthermore, this agreement is intended to address growing demand and expectations for electrified vehicles. In order to realize these objectives, Toyota and Panasonic target further advancements in automotive batteries, which are crucial technologies in electrified vehicles.

FMC Corporation (NYSE: FMC) has served the global agricultural, industrial and consumer markets with innovative solutions, applications and quality products. FMC employs more than 7,000 people throughout the world and operates its businesses in two segments: FMC Agricultural Solutions and FMC Lithium. On January 4, 2018, the company announced that it has revised its operating agreements in Argentina, allowing it to expand production and completing an important step toward the intended separation of its lithium business in 2018. The revised operating agreements update FMC royalties and corporate social responsibility (CSR) programs in Argentina and eliminate restrictions that may have prevented a change of control of FMC Lithium. The revised royalties and CSR programs are at levels generally consistent with current commitments. FMC reconfirms that it will at least double its production in Argentina during the next several years, with total annual output expected to exceed 40,000 metric tons of lithium carbonate equivalents (LCE).

Lundin Mining Corp. (OTC: LUNMF) is a diversified Canadian base metals mining company with operations in Chile, the United States of America, Portugal, and Sweden, primarily producing copper, nickel and zinc. In addition, Lundin Mining holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland. Recently, the company announced production results for the three and twelve months ended December 31, 2017, and provides an update on operations and capital projects. Operations safety performance in 2017 remained excellent with a Total Recordable Injury Frequency ("TRIF") rate of 0.60. This is consistent with the strong performance achieved in 2016, and the Company's best ever result. Year-end net cash balance was approximately $1.1 billion. Year-end cash and cash equivalents stood at approximately $1.6 billion following the fourth quarter early redemption of $550 million principal amount of 7.50% Senior Secured Notes.

Lithium Americas Corp. (OTCQX: LACDF), together with its joint venture partner, Sociedad Quimica y Minera de Chile S.A., is developing the Cauchari-Olaroz lithium project, located in Jujuy, Argentina, through its 50% interest in Minera Exar S.A. On October 23, 2017, the company provided an update on the Lithium Nevada Project located in Nevada, USA. The Company is developing the 100% owned Lithium Nevada Project, a clay-based lithium resource in the McDermitt Caldera, through its wholly owned subsidiary, Lithium Nevada Corp. Building on years of exploration and testing, a Preliminary Feasibility Study (the "PFS") on the Lithium Nevada Project is expected to be complete by the end of Q2 2018 to demonstrate the economic potential of producing lithium hydroxide from lithium-bearing claystone.

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