OTC-listed Chilean Cobalt inks Glencore offtake deal

Less than a month after landing a potential debt financing deal to redevelop its past-producing La Cobaltera project in northern Chile, Chilean Cobalt (US-OTC: COBA) has signed a letter of intent with Glencore (LSE: GLEN) for an offtake agreement covering the first five years of production.

Under the agreement, Chilean Cobalt will supply Glencore with cobalt and copper from La Cobaltera, located in the San Juan district, at a to-be-agreed-upon pricing formula that will be linked to market prices.

Through the offtake agreement, Chilean Cobalt expects to leverage Glencore’s capabilities and global network as one of the world’s leading industrial producers and marketers of cobalt. Glencore currently has extraction and processing operations in the Democratic Republic of the Congo, Australia, Canada and Norway — and a growing cobalt recycling presence in the U.S.

In addition, the Swiss commodity trading giant is expected to provide strategic support to advance the first phase of La Cobaltera, and collaborate with Chilean Cobalt on greenfield solutions for domestic U.S. processing and refining into battery materials and/or metal products.

Financing

Last month, Chilean Cobalt received a letter of intent from the U.S.-based Export-Import Bank for a funding package of up to US$317.4 million that could cover its development costs.

The Berwyn, Penn.-based company first plans to focus on near-term production potential from the resources with little to no overburden, taking advantage of the district’s historical open pit development. The company says it’s working toward a scoping study and an initial NI 43-101 resource. A second phase of development would focus on the deeper sulphide mineralization, which contains copper and cobalt, with evidence of gold. 

Based on certain early drawdown conditions, the EXIM funding may be available to fund a definitive feasibility study, Chilean Cobalt said last month. 

The company completed more than 22,000 metres of drilling at the project from 2018-19 before deciding to put it on hold due to the pandemic and market conditions. It resumed work in 2022 and listed on the OTCBQ last year. 

Under the offtake with Glencore, the companies anticipate that the majority or full spectrum of the copper and cobalt intermediate products will be shipped to the U.S. or countries that have existing free trade agreements with the U.S.  

This arrangement, Chilean Cobalt says, is in line with ongoing discussions its having with third parties regarding its strategy to establish an Americas-centric cobalt supply chain.