Fortune Minerals Ltd. Oct. 3 reported that current cobalt markets do not support the idea of developing a larger mine at its Nico cobalt-gold-bismuth-copper project in Northwest Territories.

A feasibility study published in 2014 considered a 4,650-metric-ton-per-day operation at Nico that would produce an average of 1,615 metric tons of battery-grade cobalt; 41,300 ounces of gold; 1,750 metric tons of bismuth; and 265 metric tons of copper annually.

Fortune was studying the idea of expanding the mill throughput to 6,000 metric tons per day, as well as several process improvements for the vertically integrated development reflecting the demands for greater cobalt product output from potential strategic partners.

The authors of a planned updated feasibility study for Nico – Hatch Ltd., P&E Mining Consultants Inc. and Micon International Ltd. – determined that the previously considered mill capacity remains the best option.

In addition to increased mill throughput, the consultants were assessing lower capital cost options of producing gold and metal concentrates at the mine site for sale to third-party processors that would eliminate or defer the need to construct a vertically integrated refinery.

The base case for both studies contemplated a mine and concentrator at the mine site and a related refinery in southern Canada that produces the cobalt sulphate used in lithium-ion rechargeable batteries, as well as gold doré, bismuth ingot, and copper cement.

After assessing the indicative economics of the expanded mill throughput rate, Fortune has concluded that the additional capital required to construct a larger project would not deliver a commensurate increase in cash flows to justify the expansion at prevailing cobalt and bismuth prices.

"An environment that has seen curtailment from the world's largest cobalt mines is not conducive for an expanded, capital intensive project at this time," said Fortune Minerals President and CEO Robin Goad. "However, the world continues to transition to electric mobility and will require new sources of cobalt that are independent of the Congo to meet the increase in demand from the battery sector. Fortune is optimizing its Nico development to be more robust at various cobalt prices and position the Company to support the transformation of the auto industry."

Before finalizing an updated feasibility study for Nico, Fortune is evaluating additional opportunities to optimize project economics.

One optimization being considered is to align the schedule for developing a mine at Nico with availability of the Tlicho all-season road, which would reduce the risks and costs of depending on a winter ice road to deliver the equipment, fuel and supplies needed for construction.

Fortune said construction of the Tlicho Road began in September and is progressing quickly.

This C$200 million road will provide year-round access to Whati, which is 50 kilometers (31 miles) south of the Nico deposit.

Fortune has already received environmental assessment approval for a spur road between Whati and the mine site. The Tlicho Road is a critical enabler for the NICO development that will allow metal concentrates produced at the mine to be trucked to Hay River for transportation by rail to a refinery in southern Canada for processing or to a port of export.

Waiting for completion of the road could better align Nico with anticipated increased cobalt demand for batteries in electric vehicles, which is expected to outstrip production from existing mines and known development projects by 2023.

–SHANE LASLEY