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Idaho Cobalt Project

Project Overview

The Idaho Cobalt Project (“ICP”) is eCobalt’s flagship primary cobalt deposit located in the mining friendly state of Idaho, U.S.A. Over the course of the last 20 years, the Company has spent over $135 million developing the project, which is fully environmentally permitted with proven mineable reserves of cobalt and secondary copper and gold. The ICP is 100% owned through the Company’s wholly owned subsidiary, Formation Capital Corporation, U.S. The ICP is located in the heart of the Idaho Cobalt Belt, a unique mineral rich, prolific metallogenic district unique to North America, which historically produced ~2M tonnes of cobalt from the early 1900s to the 1960s.

The market for cobalt is projected to grow at a CAGR of 7.7% over the next 5 years due primarily to growing demand for electric vehicles. At the same time, consumers are demanding ethical sources for materials. With >60% of the world's cobalt coming from the Democratic Republic of Congo in West Africa, this creates a massive need to tap into resources that are ethically sourced and supplied – cobalt resources like the ICP’s.

eCobalt is the only near-term primary cobalt producer in the US, with production expected by 2020. The Company is committed to providing clean cobalt products essential for the rapidly growing rechargeable battery and renewable energy sectors, made safely, responsibly and transparently in the United States.


Location

The ICP is comprised of two operations in two separate locations in Idaho; the Mine and Mill and the Cobalt Production Facility (“CPF”).

The ICP’s Mine and Mill site is geographically located in East Central Idaho, approximately 26 miles west of the town of Salmon. Extensive earthworks at the Mine and Mill have been completed, foundations have been poured, buildings have been erected, and electricity has been delivered to site.

The CPF site has been secured in an industrial park in the Blackfoot municipal area. Owing to its location, many of the infrastructural requirements at the CPF are already in place or relatively simple to complete. Infrastructure in place includes power supply from utility connection point adjacent to the Blackfoot site, municipal water supply, waste water disposal, rail spur and connection to the adjoining rail line. eCobalt owns the CPF building structure which is on site and ready for assembly.

Geology & Mineralization

The ICP is centered within the Idaho Cobalt Belt – a unique example of sea-floor hydrothermal brines that vented along an ancient rift within a deep-water setting, providing for an interesting and distinctive geochemistry. The Idaho Cobalt Belt is a northwest-trending zone of Co-Cu-Au occurrences, at least 64 km long and up to 10 km wide. It is an exceptional metallogenic province in which cobalt occurs in sufficiently high concentrations to make it the primary metal in the deposits.

The deposits are mostly strata-bound and appear to have formed during a mafic volcanogenic-exhalative mineralizing event on a paleo-sea-floor ca1600 million years ago. More recent regional metamorphic events have remobilized Cu and, to a lesser extent, Co in varying degrees throughout the belt. The deposits are unusually rich in Co, Cu, Fe, As, Au, B, Bi and light rare earths, but low in Ni (relative to Co), Ag, Pb, and Zn. The synsedimentary controls, mineralogy and geochemistry are unusual among ore deposits, though similar features in some other deposits are known. Sediment-hosted deposits are major ore producers in the world, but unlike the Idaho Cobalt Belt, most tend to be Pb and Zn rich.Some sediment-hosted deposits that contain Cu also contain Co - notably, the deposits of the Katanga province of the Democratic Republic of the Congo and the adjoining Zambian Copperbelt deposits. Significant differences exist between deposits in West Africa and the Idaho Cobalt Belt, whereas many intriguing similarities are found between Idaho Cobalt Beltdeposits and Sullivan, Canada, and Mount Isa and Broken Hill, Australia.

The Idaho Cobalt Beltis currently known to host several Co-Cu deposits within various sequences of metamorphosed, mafic volcanoclastic rocks.

Mineralization at the ICP is closely associated with the mafic sequences of the middle unit of the Apple Creek Formation. Dominant ore minerals include cobaltite (CoAsS) and chalcopyrite (CuFeS2), with lesser, variable occurrences of gold. Other minerals present in small quantities are pyrite (FeS2), pyrrhotite (FeS), arsenopyrite (FeAsS), linnaeite ((Co Ni)3S4), loellingite (FeAs2), safflorite (CoFeAs2), enargite (Cu3AsS4) and marcasite (FeS2).


Operations & Infrastructure

The operations office for the ICP is located in the town of Salmon, where the Company’s subsidiary Formation Capital owns two office buildings housing administrative, field, operational and management personnel, as well as several owned or leased warehouses and laydown yards.

Construction began in the summer of 2018 and is ongoing. Progress highlights include:

  • Electrification of the pumpback system is complete; water treatment pipelines are in place and secured for the winter season.
  • The Water Management Ponds are completed and the wildlife fence has been installed.
  • The liner of the Tailings Waste Storage Facility ("TWSF") is 33% complete and the drain pipe has been installed. The completed portion of the TWSF is available to accept waste rock. A protective covering will be finalized in preparation for winter and the liner will be completed in the spring.
  • The Water Treatment Plant ("WTP") construction continues inside the recently completed WTP building. Mechanical completion is expected at the end of November. Commissioning is expected to be completed next year in conjunction with the pumpback system in preparation for the commencement of underground operations.
  • Mill foundations are in progress and are approximately 40% complete.
  • Potable water and power systems are installed and functioning.
  • Phase 1 of the Portal Bench is under construction and is scheduled for completion this year.
  • The maintenance building is in place and functional.

Updates can be found in our News section.

ICP Site Overview - October 2018

ICP Site Overview - October 2018



Resources & Reserves

2017 Ram Deposit Resource Estimate (0.20% Co cut-off) (3)(4)

Category

Resource

Co (%)

Co

Cu (%)

Cu

Au (oz/t)

Au

(M tons)

(M lbs)

(M lbs)

(oz)

Measured(1)

1.73

0.54

18.6

0.76

26.3

0.014

24,300

Indicated(1)

1.71

0.64

22.0

0.71

24.1

0.017

29,900

M+I

3.44

0.59

40.6

0.73

50.4

0.016

54,200

Inferred(2)

1.54

0.51

15.6

0.68

21.0

0.012

18,700

  1. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The Mineral Resources in this news release were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
  2. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature. There has been insufficient exploration to define these Inferred Resources as an Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category.
  3. The Cobalt cut-off grade for inclusion in the resource is 0.20%, no consideration of copper or gold content was used in determination of cut-off grade.
  4. Contained metal figures and totals may differ due to rounding of figures


2017 Ram Deposit Mineral Reserves (0.25% Co Cut-off)

Category

Zone

Co%

Cut-off

Resource

(Tons)

Co (%)

Co
(lbs)

Au (opt)

Au
(ounces)

Cu (%)

Cu
(lbs)

Proven

3021, 3022, 3023

0.25

1,987,209

0.43

17,107,067

0.013

25,276

0.69

27,383,521

Probable

3021, 3022, 3023

0.25

1,674,685

0.52

17,409,858

0.017

28,010

0.67

22,372,024

Total Reserve

3021, 3022, 3023

0.25

3,661,894

0.47

34,516,925

0.016

53,286

0.68

49,755,545

  1. The Qualified Person (Q.P.) for the Mineral Resource estimate is Charley Murahwi, P.Geo., FAusIMM.The Qualified Person for the Mineral Reserve estimate is Bernard Foo, P.Eng, M.Eng., MBA.Both Q.P.’s are members of the association of Professional Engineers in Ontario and are employees of Micon International Limited.
  2. Mineral Reserves have an effective date of September 27, 2017. All Mineral Reserves are Proven and Probable Mineral Reserves.
  3. Cobalt cutoff grades were 0.20% for the Resource estimate and 0.25% for the reserve estimate.
  4. Micon updated the estimate of cobalt, copper, and gold resources in a three-dimensional resource wire frame and block model and were used for mine planning, design, and scheduling as part of the Feasibilituy Study Report dated November 10, 2017 and filed on SEDAR.
  5. Micon utilized the previously estimated resources for the Ram deposit (completed by Mine Development Associates for the PEA) supported by their own geostatistical model and reserve criteria
  6. There is approximately 34% dilution forecasted in the stope designs with additional dilution applied, by mining method and stope conditions, for over-break.
  7. The copper and gold resources and reserves are those resources and reserves carried within the stope blocks which attain the cobalt cut-off grade.
  8. No metal value is given to the copper or gold in determining the cobalt resource cut-off.
  9. No metal recoveries are applied, as this is an in-situ resource.
  10. Rounding as required by reporting guidelines may result in summation differences.

Results of an updated resource model were announced on February 7, 2018 based on results from a three-hole, 5,000 foot drill program completed in 2017, and the creation of a new three-dimensional resource model using current state of practice software and geostatistical tools. Compared to the September 27, 2017 FS, the total Measured and Indicated resources increased to 3.87 million tons at 0.59% Co, compared to 3.44 million tons at 0.59% Co and Inferred resources increased to 1.82 million tons at 0.46% Co from 1.54 million tons at 0.50% Co.

2018 Ram Deposit Updated Mineral Resource Estimate (3)(4)

Category

Resource

Co (%)

Co

Cu (%)

Cu

Au (oz/t)

Au

(M tons)

(M lbs)

(M lbs)

(oz)

Measured(1)

1.50

0.66

19.9

0.78

23.6

0.017

26,000

Indicated(1)

2.37

0.54

25.8

0.89

42.2

0.018

42,000

M+I

3.87

0.59

45.7

0.85

65.8

0.017

68,000

Inferred(2)

1.82

0.46

16.7

0.81

29.4

0.015

27,000

  1. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The Mineral Resources in this news release were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
  2. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature. There has been insufficient exploration to define these Inferred Resources as an Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category.
  3. The Cobalt cut-off grade for inclusion in the resource is 0.20%, no consideration of copper or gold content was used in determination of cut-off grade.
  4. Contained metal figures and totals may differ due to rounding of figures

Feasibility Study

Results from a NI 43-101 Technical Report, prepared by Micon International in conjunction with SNC Lavalin, both of Toronto, Canada was announced in the Company’s news release dated September 27, 2017. The Feasibility Study (“FS”) is based on an underground mine with a target production rate of 800 short tons per day (“tpd”) and a weighted average annual production of 2.4M lbs of cobalt, 3.3M lbs of copper and 3,000 oz of gold over a 12.5 year mine life utilizing a 0.25% cobalt cut-off grade. The FS outlines the production and processing feasibility of ICP as an underground mine and mill, developing the Company’s Ram deposit of the ICP. The economic model uses a 34% corporate tax rate and a 7.5% discount rate, resulting in an after-tax NPV of $135.8M and an IRR of 21.3% using an average base case price of $26.65/lb for contained cobalt.

The Company is currently preparing a new FS ("new FS"), which outlines the production of a clean cobalt concentrate, which is expected to be completed in 2018. This new FS will incorporate simplifications to the previous flow sheet of the CPF, where the original design called for the production of cobalt, copper and magnesium sulphates, as well as gold and copper concentrate. The new, much simpler design to produce a single clean cobalt concentrate is expected to further de-risk the project and reduce CAPEX.

This new opportunity is being pursued in response to changes in battery supply chain dynamics and in-depth discussions with potential off-take partners. 


Opportunities

The ICP has the potential to be a district-scale project, of significant importance on a global scale, providing a safe, secure and transparent supply for the growing cobalt market.

The Ram deposit, which currently hosts 100% of the ICP’s NI 43-101 compliant reserves and resources and represents only 7% of eCobalt’s total claims, remains open at depth and along strike offering significant opportunities for expansion. The Sunshine and East Sunshine deposits are within a mile trucking distance of the Ram and represent additional potential to the mineral resources of the ICP. In addition, more than a dozen underexplored prospects and exploration targets have been identified within the property boundary.

Technical Reports

Details on the Feasibility Study filed on November 10, 2017 can be found here.

National Instrument 43-101 compliant Technical Reports and other information are available for review and download at www.sedar.com.