Formation improves Idaho Cobalt economics

Vancouver — Formation Capital (FCO-T) has tabled an updated prefeasibility study and new reserve estimates, which incorporate new metallurgical data permitting considerations and updated mining costs, for its Idaho Cobalt project.

The diluted proven and probable reserves, using a net smelter return cutoff of US$65 per ton (equivalent to about a 0.3% cobalt cutoff), now stand at 1.1 million tons grading 0.641% cobalt, 0.49% copper and 0.017 oz. gold per ton.

Using a net smelter return cutoff of US$100 per ton, proven and probable reserves are 983,729 tons grading 0.689% cobalt, 0.48% copper and 0.018 oz. gold per ton.

Capital costs during the first three years, including pre-production mining, are pegged at US$48.4 million. Operating costs are estimated to be US$68.73 per ton and US$4.65 per lb. cobalt. The net present value (NPV), with an 8% discount rate, is set at US$71.7 million. The internal rate of return (IRR) for the company is pegged at 64.93%. These figures are based on prices of US$15 per lb. cobalt, US$0.80 per lb. copper and US$275 per oz. gold. Using a US$12-per-lb. cobalt price, the IRR drops to 39.37% and the NPV drops to US$36.7 million.

The study was performed by Mine Development Associates of Reno Nevada. It envisages the production of cobalt oxide. The capital costs include the flexibility to produce several cobalt products, including cathode metal, hydroxide and carbonate. Several mining scenarios were evaluated. When only the proven and probable reserves are used, the mine life is about five years. If the inferred material is included, the production life extends to 10-12 years.

When the diluted inferred material is included, the resources stand at 2.6 million tons grading 0.65% cobalt, 0.43% copper and 0.02 oz. gold per ton. Operating costs drop to US$67.66 per ton, but rise to US$4.88 per lb. cobalt. The net present value is US$187.3 million with an internal rate of return of 91.5%, based on a US$100 net smelter return per ton and US$15 per lb. cobalt.

Formation Capital says the mineralization remains open in the Ram Deposit, which currently constitutes 88% of the project’s reserves and resources. Mineralization is also open in the East Sunshine and Northfield deposits — they were not included in the study.

The study envisages production starting at 400 tons per day. This would progress up to an 800-ton-per-day milling rate, using a conventional flotation circuit. New metallurgical test work has pegged mill recoveries at 94.1% for cobalt, 92.9% for copper and 78.2% for gold. The mill is expected to produce a concentrate grading 14.4% cobalt and 7.4% copper with a gold credit. The concentrate would be sent off-site for processing. The deposits would probably be mined using ramp-and-fill and cut-and-fill underground mining methods and access would be via a spiral decline.

The tailings would be filtered and de-watered, with about 50% of the material used for back-fill in the mining process. The remaining tailings would be dry-stacked so that no tailings dam would be required. Formation Capital says a total of 70 acres would be disturbed during production and all of it would be reclaimed at the end of the mine’s life.

The company has filed the plan of operations with the USDA Salmon Nation Forest in January this year. It is in the process of preparing its Environmental Impact Statement. A final feasibility study is expected to be competed by the first quarter of next year.

The Idaho Cobalt project is located approximately 26 miles west of the city of Salmon. It is within the Idaho Cobalt Belt, a northwest-trending zone of cobalt occurrences, which is 31 miles long and centres on Noranda’s Blackbird Mine.