Sole US cobalt mine intends to go private after running out of cash

Jervois Global (TSXV: JRV; ASX: JRV), owner of the United States’ only cobalt mine, has paused mining, entered bankruptcy proceedings and plans to go private by the end of April.

The U.S. Chapter 11 bankruptcy process is to start this month and company activities are expected to continue, Jervois said in a release on Thursday. It halted mining in March 2023 due to low cobalt prices.

Melbourne-based Jervois has made a recapitalization deal with Boston-based Millstreet Capital Management to provide it with US$145 million in new equity for various developments, including US$70 million to restart the São Miguel Paulista nickel cobalt refinery in Brazil.

Millstreet, which manages about US$3 billion, is expected to carry out the recapitalization in Australia in a process consistent with the Chapter 11 plan. It requires Jervois to dispose of its assets to a Millstreet nominee, conditional on creditor and ASX approval.

Production on hold

The company issued more updates for exploration than for production at its Idaho Cobalt Operation (ICO) last year. It previously reported in March 2023 that it was delaying final construction of the project due to inflation and low cobalt prices.

Jervois spent about US$130 million building ICO, commissioning it in October 2022 and producing some 27,000 tonnes for processing. Commercial production was to have started in the first quarter of 2023 at the site, located 350 km northeast of Boise.

The cobalt price is down about 18% from one year ago and now sells for US$10.91 per pound, according to Mining.com. Prices last went this low in 2016.

Most of the world’s supply of cobalt, used in electric vehicle batteries comes from the Democratic Republic of Congo, though mines there face criticism for their low ESG standards.

Resource estimates

ICO’s Sunshine historic deposit hosts 520,000 inferred tonnes grading 0.5% cobalt, 0.68% copper and 0.49 gram gold per tonne for 5.7 million lb. cobalt, 7.7 million lb. copper and 8,210 oz. gold, according to an initial JORC resource published in last year’s first quarter.

That followed a resource estimate for ICO from December 2023 that outlined 5.2 million measured and indicated tonnes grading 0.4% cobalt, 0.7% copper and 0.5 gram gold per tonne for 89,000 oz. contained gold. 

That resource and its drilling were funded with US$15 million from the U.S. Department of Defense to help build a domestic cobalt supply chain.

Last year, Jervois also advanced a feasibility study for a cobalt refinery in the U.S., with the company shortlisting sites in Pennsylvania and Louisiana as potential locations for the facility. That study is being supported through the DoD funding.