March 31, 2021
First Cobalt Corp. (TSXV:FCC, BUY, C$0.45 target, David A. Talbot) announced that it has entered into an exclusivity agreement with a lender regarding a US$45M debt financing to partially fund the recommissioning and expansion of FCC’s Cobalt Refinery project in Ontario. This debt is expected to cover most of the US$60M capital requirement. The debt has not yet been finalized; the lender is expected to complete remaining due diligence prior to the negotiation of a definitive agreement. We expect the remainder of the capex to be funded via equity financing, which could be potentially offset offset by a second offtake with advanced payments. Based on the tone of the press release, we do not expect management to target royalty or streaming arrangements. First Cobalt has momentum on its side, starting with securing C$10M in government funding land December (read more), in the backdrop of rising cobalt prices. This has been followed by, amongst other things, the elimination of debt (read more), sourcing of refinery feedstock, negotiation of favourable offtakes (read more), and the strengthening of its balance sheet. With the bulk of project financing nearing competition, pre-construction activities well-advanced (read more), and permitting underway, we believe First Cobalt is well on track to commence production of cobalt sulphate in H2/2022. Read more
