- US and Canadian governments recognize the importance of locally sourced raw material including critical metals such as cobalt, and Fortune has proposals currently being looked at.
- Current projects are polymetalic which include, cobalt, gold, bismuth and copper, which helps offset price volatility of individual metals.
- In about two years time, all of the known production opportunities for cobalt will have been depleted.
- Bismuth is coming off a difficult period and markets expected to re-establish balance with price appreciation to profitable levels.
Robin Goad is founder and CEO of Fortune Minerals, where he brings over 30 years experience and his background as a professional geologist. He joined Core Consultants founder, Lara Smith to discuss their current projects, and the market for critical minerals. The following is a transcript of the interview:
Lara Smith: Hello, I’m Lara Smith, I’m here with Robin from Fortune Minerals. How are you Robin?
Robin Goad: I’m well, thanks, Lara. Thanks for having me on.
Lara Smith: Where are you joining us from today?
Robin Goad: So I’m with you today from London, Ontario, which is about halfway between Detroit and Toronto in Southwestern Ontario and Canada.
Lara Smith: Okay. And you’re developing a critical metals project in the Northwest territories in Canada?
Robin Goad: That’s correct. Our NICO project is at it’s nearby satellite deposit Sue-Dianne, are both IOCG’s, the mineral reserves for the NICO project are 33 million tons containing one of the largest undeveloped deposits of cobalt outside of the DRC, which also contains more than a million ounces of gold and 12% of the global reserves of bismuth, which, both bismuth and cobalt are considered critical minerals. They’re both identified on the U S critical minerals list as well as the European Union’s list.
Lara Smith: Yes, that’s correct. So you’re one of the largest reserves of cobalt in the Northern hemisphere, outside of the DRC, is that correct?
Robin Goad: Yes, although it is a polymetallic deposit, so it sources its metals from four different recoverable metals in addition to the cobalt and the gold and the bismuth, there’s also copper, but I think more importantly, it’s a primary cobalt project, meaning that cobalt is the dominant metal or the dominant revenue source in the project.
And it’s one of the most advanced projects outside of the DRC, with $130 million expended to date, positive feasibility study, the environmental assessment approval to build the mine and the concentrator and we’re now just working with various potential partners on some process options and hope to be able to construct this project over the next couple of years.
Lara Smith: One thing that always interests me when, when you have a polymetallic project, and I suppose that’s just because I come from an analyst background, if you’re developing, so you’ve got four metals, if you will, cobalt being the primary one, how many of those need to be processed in order to be NPV positive?
Robin Goad: All of them. So we evaluate our project on a net smelter return basis. So each metal contributes differently within the deposit. There’s a zonation in the deposit where we have, for example, a gold, rich, high-grade core, that’s an excessive two grams of gold per ton. So we have overlapping envelopes of gold. The cobalt is pretty much pervasive in the deposit, and the bismuth is also a little bit broader than the gold, but less pervasive than the cobalt. And the copper really is a relatively insignificant byproduct. I mean, generally speaking, today’s prices were actually, if we use, you know, today’s 1700 US dollar gold and $18 $17 cobalt, we’d actually derive most of our revenues from gold, but we don’t expect the cobalt price to remain down here at that price level.
We expect once covid19 is resolved and we get back to more normal. economic conditions, then we’ll be returning to greater demand for particularly battery metals.
Lara Smith: Maybe that’s just an interesting point because cobalt, I mean battery metals as a whole, have come off largely far from their highs and cobalt in particular has been extremely volatile and it has come off completely.
Where do you see the longterm cobalt price? I know it’s a difficult question.
Robin Goad: Yeah, it is. It really depends on your perspective, but generally speaking, the longterm 25 year average for cobalt is around $25 US per pound. Today, it’s trading a little lower than that. And a year ago it was as high as $48 per pound.
So it is indeed a very volatile metal.that’s one of the nice things about having over a million ounces of gold in the deposit. So you’ve got different sources of metal that you can rely on when you do have metal price volatility, particularly precious metals, which are counter-cyclical.
Yeah. But getting back to your original question is where do we expect the price to be? If we look at most analysts views of the current supply of cobalt and the perspective deposits that could come online, in about two years time, we will deplete all of the known production opportunities for cobalt, and we’re going to need additional cobalt mineralization or new deposits being identified.
So, today. you’ve actually got production coming offline and in the DRC, Glencore, which is the largest corporate producer of cobalt and shut down Mutanda and cut back a little bit at Katanga as well, but you’ve also got the consumption of cobalt down from slower industrial activity.
So, I expect in the next couple of year that we will be transitioning into a prolonged period of deficit. And that will be very, very attractive for our project.
Lara Smith: Right. And then bismuth, bismuth is one of those lesser known critical metals. And from a market perspective, maybe you could just speak a little bit about the market for bismuth? What is the price point and who’s buying it?
Robin Goad: Yeah, that’s complex as well because it’s a market that has about 20,000 tons of annual consumption, very difficult to get reliable information. Its primary use is in the automotive sector. It’s used for a windshield frit, those are the little black compound around the perimeter of the windshield of your car, which is protecting the windshield seal from degradation, from UV radiation as well as changing temperatures, because bismuth is one of the very few metals which expands when it cools, so if you want to produce a dimensionally stable alloy or compound, you blend it in. It’s used also in the automotive industry for any corrosion coatings, particularly, German cars are electroplated in a bath with bismuth that is similar to a galvanizing process, but bismuth has actually replaced the lead because of toxicity concerns. I would say the greatest growth opportunity for bismuth is as a non toxic environmentally safe replacement for lead in free machining spiels, in ceramic glazes and solders used in plumbing and electronics industries. Cosmetics for example, it also utilises Bismuth, castings; it’s got quite a number of different applications in terms of price. We’re coming off a bit of a difficult period for bismuth because about 75% of production is coming out of China. And since we also had a large inventory of minor metals, not just for bismuth, but other minor metals, which were in something called the Fanya exchange, which was a Ponzi scheme, which went bankrupt I think in 2015, but those inventories were, the last of them were purchased at the end of last year. And during that period one of the major Chinese producers went bankrupt, a large producer in Vietnam stopped producing, so we’re seeing the market transition back into balance. And generally speaking, the cost of production is around somewhere between four and $5 per pound. So I would expect that we’ll see a price north of $5 per pound as this inventory is basically reduced.
Lara Smith: Okay. And then what’s next for Fortune Minerals?
Robin Goad: Yeah, we’ve just come through an interesting period. We have a positive feasibility study and we had a project financing which was with a Chinese company a few years ago. That transaction didn’t proceed. And we were in 2018 looking at very high cobalt prices.
Strategic partnerships on the automotive and battery industry were looking for larger productions, so we expanded the project in an updated feasibility study, which was not the thing to do because a lot of these metals that are vertically integrated projects, you really have to look at them from the perspective of processing as opposed to mining.
They’re really a processing plant with a captive source of material. So our original feasibility study at 4,650 tons per day was about right. We had a combination of underground and open pit mining, and we’re going back to that philosophy where we had a very attractive rate of return. So we’re going back to essentially the 4,650 ton per day project combined underground and open pit mining. And we’re also looking at collaboration on processing plants to reduce refinery capital costs. At the same time we’re in discussions with both the US government as well as the Canadian government on critical mineral supply.
This has become a very topical consideration, not only because the risks that are associated with geographic concentration, for example, 70% of cobalt supply coming out of the DRC and 80% of the cobalt chemicals being produced in China has put US, and North American and also European industry at a disadvantage.
So governments are looking to try and put some balance back into the markets. And even in this pandemic it’s also exposed how critical our supply lines are to have normal sort of local sources of raw materials to support our businesses.
Lara Smith: Yes. Yes, absolutely. And has the American DOD and the department of defense and various departments of security, have they stepped forward? I know there’s a lot of talk and a lot of interest, but have they actually stepped forward and become development partners?
Robin Goad: They have made investments in a rare element project that has already been announced. I can tell you that we have discussions with both the US and the Canadian governments. I’m not at Liberty to discuss those discussions at this point other than we have proposals that are being looked at.
Lara Smith: Okay. Thank you very much for that. Is there anything else you’d like to add before we go?
Robin Goad: Just again highlighting the fact that we do have a million ounces of gold and it can be mined, or concentrate our mining in the gold rich parts of the deposits, which exceeds two grams of gold per ton a million announces, so that’s in itself, most people would consider a two gram deposit in an open pit mine to be economically attractive. And quite frankly, it’s under normal metal price scenarios. It represents only about a third of the metal inventory in our mines So we’ve got an attractive project with four different payable metals, three in particular, but also being an IOCG we’re looking at exploration opportunities. We do have a satellite deposit. Large IOCG’s in other parts of the world, like Olympic Dam is 8.3 billion tons, they occur in clusters with multiple deposits, sometimes in excess of a billion tons.
Other examples of that deposit style are the Carajás deposits in Brazil, the Candelaria deposits in Chile, so we expect we have some large geophysical anomalies that have not been tested. So in addition to the known deposit of 33 million tons, we have a satellite deposit plus some exploration opportunities, which we’re looking at as well.
And if it becomes a sort of a typical IOCG district, there’s huge exploration upside of this project.
Lara Smith: Okay, well thank you very much and best of luck with developing your project.
Robin Goad: Thanks so much.
Lara Smith: Thank you Robin. Take care.
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