Idaho cobalt on fast track

Denver — After submitting a plan of operations for the Idaho Cobalt project, Formation Capital (FCO-T) has voluntarily agreed to a joint review by state and federal regulators and third-party consultants in an effort to speed up the permitting process.

The Vancouver-based concern is hoping to construct the nation’s only cobalt mine, 26 miles west of Salmon in east-central Idaho.

Proven and probable reserves stand at 1.25 million tons grading 0.7% cobalt, 0.54% copper and 0.02 oz. gold per ton. Also present are 2.1 million tons of resources at similar grades. The company expects to post increased reserves and resources in the months ahead.

Formation turned in the plan of operations in January. Since then, capital costs for the underground operation, including a 20% contingency, have been reduced to US$46 million from US$81 million.

The higher estimate called for construction of a shaft, which is no longer deemed necessary. Formation now envisions driving a spiral decline into the two main deposits, Ram and Sunshine, in both of which mineralization is open in several directions.

Using cut-and-fill methods, the company expects to begin production at the daily rate of 400 tons, gradually ramping up to 800 tons. The ore would be driven to the surface, then sent uphill, via aerial tramway, to the flotation concentrator.

The company will use pressure-leaching on sulphide concentrates to produce 1,500 tons of cobalt per year over a mine life of nine years. Based on a cobalt price of US$20 per lb., the internal rate of return is a robust 70%. At the lower price of US$16 per lb., it is 44%. Cobalt prices recently have been hovering between US$13 and US$14 per lb.

Montana-based Hydrometrics has been chosen to prepare the environmental impact statement, which should be completed by year-end. Mine construction will begin after the company receives a record of decision from the U.S. Forest Service, probably in mid-2002.

Mineralization occurs as tabular exhalative deposits in Precambrian volcanoclastics and metasediments of the Yellowjacket formation. Cobaltite is the dominant mineral.

Production from the mine would represent 5% of the world’s cobalt production. The U.S., which consumes 40% of the world’s cobalt, imports the metal from Norway, Finland, Canada and Zambia.