First Cobalt (FCC.V) has signed a flexible, long-term, offtake agreement with Stratton Metal. The agreement involves the sale of future cobalt sulphate production from the Company’s refinery located in Ontario, Canada.
“Stratton Metals are among the most knowledgeable cobalt traders in the world, with a network of relationships in every major market…This sales arrangement is a key milestone for the Company as firming up commercial arrangements supports the financing process for the refinery expansion. Refinery commissioning remains on schedule for October 2022. We look forward to working with Stratton to supply the world’s most sustainable cobalt to the electric vehicle market,” said Trent Mell, President and Chief Executive Officer.
First Cobalt is a hydrometallurgical refinery in the community of Temiskaming Shores, located north of Toronto. Hydrometallurgy refers to a technique used in the process of metallurgy, the process of of obtaining metals from their respective ores. Hydrometallurgy involves leaching metals from ores by using aqueous solutions. The Company’s facility operated from 1996 to 2015, producing metals like cobalt, nickel, and silver. As its name suggests, First Cobalt’s is committed to refining cobalt into battery grade cobalt sulphate suitable for lithium-ion batteries.
Regarding First Cobalt’s agreement with Stratton Metal, the Company will have the option to sell up to 100% of its annual cobalt sulphate production to Stratton Metals upon the completion of its refinery production. Quantities are subject to a minimum annual quantity and will be decided by First Cobalt in advance of each calendar year. The agreement itself consists of a five year contract and sale prices of First Cobalt’s products will be based on the prevailing market price at the time of shipment.
This agreement with Stratton provides First Cobalt with the flexibility to pursue offtake opportunities with potential OEM partners and aligns well with the Company’s goal of bringing battery grade cobalt to the North American Electric Vehicle (EV) market. Ultimately, First Cobalt hopes to market a brand of ethically sourced cobalt recognized for having one of the lowest greenhouse gas emissions in the industry.
First Cobalt’s future is looking promising especially considering the massive success the Company has found in the last few month following a joint $10 million investment into First Cobalt in December 2020. The investment was made by the Government of Canada in cooperation with the Government of Ontario and was intended to assist in accelerating commissioning and expansion for the Company.
First Cobalt’s facility is the only permitted cobalt refinery in North America. As a result, The Company is heavily relied upon for manufacturing batteries for the EV market. With this in mind, First Cobalt’s growth will likely be impacted by the growth of the EV market which is still in its infancy. As of 2020, China accounted for nearly 45% of the global stock of EVs with 2.3 million units while the U.S. only possessed 1.1 million. That being said, the North America EV market still has plenty of room to grow as electric vehicles become increasingly mainstream.
First Cobalt’s stock price opened at $0.36 today and currently sits at $0.375.