Cobalt may be a Trilogy "game changer"

Trilogy Metals Inc. July 20 filed a technical report that includes the 77 million pounds of cobalt resource outlined so far at the Bornite project in Northwest Alaska.

"Now that we have filed the new technical report for the Bornite project, the next step is to finish the metallurgical test work on the cobalt resources, which we expect to be completed by the end of the year," said Trilogy Metals President and CEO Rick Van Nieuwenhuyse.

In total, Bornite is estimated to host 182.4 million metric tons of inferred resource averaging 0.019 percent (77 million lb) cobalt, according to the maiden cobalt resource calculation released in early June.

This is on top of the roughly 6.4 billion lb of high-grade copper that has already been outlined at this world-class deposit in the Ambler Mining District.

Initial results from Trilogy's on-going metallurgical studies indicate that roughly 80 to 90 percent of the cobalt occurs as cobaltiferous pyrite, which preferentially reports to the tailings after the copper is extracted.

"This is great because forming a pyrite concentrate from the copper tails should be relatively straight forward using flotation or dense media separation," said Van Nieuwenhuyse. "In the next few months we will complete flotation test work to concentrate cobalt into a pyrite-rich product that can be considered for further upgrading and recovery of cobalt metal at the Bornite site."

The Trilogy CEO said positive results from this work could add significant value to the Bornite project.

"I specifically note the US$690 million transaction that Wheaton Precious Metals Corp. and Cobalt 27 Capital Corp. completed with Vale S.A. in which WPM and Cobalt 27 combined acquired a 75 percent cobalt stream from the Voisey's Bay underground deposit – a project requiring a US$2.1 billion investment and anticipated to begin production in 2021," he added. "This transaction resulted in WPM and Cobalt 27 jointly adding approximately 54 million lb of attributable cobalt reserve to their combined inventory."

As its name implies, Wheaton Precious Metals typically buys gold and silver streams, which is a form of financing where companies such as Wheaton pays cash up front for future mine production. Cobalt 27, on the other hand, was formed specifically to acquire streams and royalties for cobalt and other metals needed by the growing electric vehicle sector.

Vale had previously put the underground expansion at its Voisey's Bay project in Newfoundland and Labrador on hold due to weak nickel prices. With nickel prices rising sharply over the past year and growing demand for the cobalt, due that metal's importance in the batteries that power electric vehicles, the Brazil-based miner has decided to move forward with this development.

The streaming deal with Wheaton and Cobalt 27 is funding a significant chunk of the underground development costs.

Trilogy's Bornite project may benefit from a similar arrangement.

"Demonstrating the economic viability of the cobalt resources at Bornite could become a game changer for the company given our current 77 million pound inferred cobalt resource," said Van Nieuwenhuyse.

The already significant cobalt and copper resource at Bornite is expected to get a major boost, thanks to major drill programs being funded by Australia-based South32 Ltd.

Early last year, South32 cut a US$150 million deal with Trilogy to earn up to a 50 percent joint venture interest in the Upper Kobuk Mineral Projects, which encompasses Bornite, the Arctic Mine project a few miles to the north and dozens of other prospects across a 353,000-acre land package that blankets most of the Ambler Mining District.

To keep its UKMP option in good-standing, South32 agreed to invest US$10 million a year on the project over a three-year span, funds that have been spent so far on expanding Bornite.

A US$10 million South32-funded drill program carried out in 2017 demonstrated that the higher grade underground portion of Bornite covers a 1,500- by 2,500-meter area beyond the previously defined 6.4 billion lb copper and 77 million lb cobalt resource.

With South32 more interested in finding out the scale of the Bornite, the holes drilled last year were too widely spaced to calculate a resource for the copper and cobalt in this expansion area.

Another US$10 million drill program being carried out this year, which is to include at least 8,000 meters of in-fill and expansion drilling, is expected to provide the coverage needed to bring some of this expansion area into the Bornite resource.

"(W)e currently have three drill rigs in operation at the Bornite project continuing with an in-fill and expansion drill program," said Van Nieuwenhuyse. "Management expects continued success in expanding the cobalt and copper resources at Bornite to yield additional value to the company."

–SHANE LASLEY