NICO Mine could move ahead within 2 years, claims CEO

Wednesday's announcement of federal funding for an all-season road to Whati has the CEO of a nearby mining prospect expecting operations to begin within two years.

$600 million still needs to raised, but economics of the project are good, says analyst

The prospects for turning the Nico deposit into a producing mine have increased alongside the price of cobalt. (Submitted by Troy Nazarewicz)

Wednesday's announcement of federal funding for an all-season road to Whati, N.W.T., has the CEO of a nearby mining prospect expecting operations to begin within two years.

"Having an all season road was a precondition for the development of this asset," says Robin Goad, CEO of Fortune Minerals, which owns the NICO project, 50-kilometres northeast of Whati.

"NICO is a mine that ships out a concentrate, not a gold bar or a bunch or diamonds, so we absolutely have to have road access in order to get our product out to market."

To date, the company has spent upwards of $110-million developing the gold-cobalt-copper-bismuth project, and the necessary environmental assessments have been completed for the mine. 

It's still hundreds of millions away from being fully financed, however. The company needs nearly $600 million in additional funding to develop the mine and a processing plant in Saskatchewan that will turn cobalt into the cobalt-sulphate used in lithium-ion batteries.
Robin Goad is the president of Fortune Minerals, which is in negotiation with the Tlicho Government. (Submitted by Troy Nazarewicz)

Goad says he's "confident" his company can secure the money "hopefully a lot sooner than two years."

His reason for optimism? A rapidly growing demand for cobalt.

The metal is one of the principal components of the lithium-ion batteries expected to power the next generation of electric cars.  

"There's a transformative evolution of the automotive industry happening right now, and this project is part of it," says Goad.

"There are more than 15 mega-factories that have either been announced or under construction, including the Tesla Gigafactory in Nevada, which will require about 7,800 tons of cobalt alone to be able to produce batteries for electric automobiles."  

If the mine does proceed, Goad expects there to be around 250 jobs created at the mine, and a further 75 at the plant in Saskatchewan.  

'A very compelling story,' says analyst

Goad's optimistic assessment is echoed by commodities analyst Siddharth Rajeev, director of research for Vancouver-based Fundamental Research Corp.

Funding for the Whati road is "extremely positive news for Fortune considering it's an advanced stage project they have in NICO," says Rajeev.  

"Cobalt was one of the best performing commodities last year, prices went up from just under $11 [per pound] to more than $15, which is a 40 per cent increase," he explains, adding that factors affecting both Cobalt supply and demand are looking positive for Fortune.

"Overall demand for cobalt is expected to go up by 50 percent over the next ten years," he says.

That's being driven by a demand for electric cars as well as batteries to store energy produced by renewable sources like wind or solar.
Rendering of the proposed NICO pit, mill and camp site (submitted by Troy Nazarewicz )

On the supply side, instability and concern over child labour in the Democratic Republic of the Congo, where the majority of cobalt is currently mined, means opportunities for mines elsewhere in the world, he says.   

"Fortune, because they're one of the very few companies that I know of that have an advanced-stage project, could potentially supply cobalt to the North American market."

There's only one other advanced cobalt project in North America, he says, and the economics of the Fortune project are likely the superior of the two.

Still risks

Of course none of this means NICO will necessarily move ahead.

The company had fully lined up financing two years ago, only to have the interested Chinese company pull out — something Goad attributes to presidential change in China, and Rajeev attributes to the "market correction or downturn of the last few years."

And Fortune has had upsets before.

"The company had a major setback in 2015, when it defaulted on a debt facility, which it had used to acquire the Revenue Silver Mine (a near-term silver producer in Colorado, U.S.) in 2014," writes Rajeev in a report last year.

"The default was primarily a result of the soft commodities market at that time, which made it challenging for the company to attract capital to finance the mine."

The company's ability to attract money to the NICO project today will depend on the overall health of the mining sector, says Rajeev, adding that we've "not seen any high [capital expenditure mining] projects being advanced in the last couple of years."

But he says Goad's optimistic outlook is not misplaced.    

"I think this year, especially because of the overall gradual improvement in the commodities market, and the strong improvement in cobalt, I think the chances of them getting financing is much stronger this year than last year."


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