Juniors fueling new cobalt rush in Northern Ontario

Frank Basa, Canada Cobalt Works’ (formerly Castle Silver Resources) president and CEO and Douglas Robinson. CREDIT: CASTLE SILVER RESOURCES

Northern Ontario has seen its share of staking rushes.

Nickel at Sudbury toward the end of the Nineteenth Century 1883.-There was silver at Cobalt, the cradle of Canada’s mining industry, in the early Twentieth Century and uranium at Elliot Lake in mid-century. There was gold at Kirkland Lake and Timmins in the 1910s, at Red Lake in the 1920s and at Hemlo in the 1980s.

Now interest is returning again to the western shores of Lake Temiskaming and the town of Cobalt – not for silver but for cobalt metal.

First Cobalt’s land package includes a permitted cobalt refinery. CREDIT: FIRST COBALT

Cobalt has become one of the most sought after metals for its applications in energy storage (batteries) and electric vehicles. According to some analysts, by 2020 fully 75% of all lithium-ion batteries will contain cobalt in some chemical form. It also has applications in catalysts, superalloys, colouring, magnets and more.

As demand soars, supply has not. The shortage led to the price more than doubling last year to US$36 from US$15 per lb. BMO is predicting at least a US$40/ lb. price by the end of this year.

About half the global supply of cobalt currently comes from the Democratic Republic of Congo, a fact that raises ethical concerns. Much of it is recovered by artisanal miners in unsafe conditions and by child labourers. Canadian cobalt would be the flag bearer for responsible production. And the recent introduction of new cobalt mining taxes in DRC will make that country less appealing to investors.

China relies on DRC for as much as 90% of its cobalt needs, and China is the largest producer of cobalt chemicals so in demand in the clean energy sector.

Canada has produced cobalt for well over 100 years as a by-product of base metal mining. That is the situation for 90% of the world’s output. If the plucky juniors scouring Northern Ontario have their way, they will be this country’s first primary cobalt producers.

The desire to monetize cobalt has lead Vale to create the first cobalt streaming opportunity. Sherritt International CONTINUED ON PAGE 58 recently placed an offering with share purchase warrants priced on the movement of the cobalt price. Readers might expect other innovative means to boost cobalt investment before long.

Here is a look at a few of the explorers active in the Cobalt Camp.

First Cobalt Corp.

First Cobalt is the largest landholder in the Cobalt camp, thanks to its takeover of both Cobalt One and CobalTech last summer. The merger made First Cobalt the largest explorer in the world, according to president and CEO Trent Mell.

“Once you put these three companies together we would have about 45% of the prospective properties in the Cobalt, Ontario, camp,” he said.

The company’s properties cover more than 100 sq. km in the camp and include 50 past producing mines and a mill.

First Cobalt divides what it calls the Greater Cobalt project into three parts. In the north near the town of Cobalt, it holds the former Juno, Silverfields, Hamilton, Drummond, Conisil, Ophir and Silver Banner properties. In the central part to the south, it has the Caswell and Woods Extension properties. In the south near the former town of Silver Centre, it holds the Keeley-Frontier and Bellellen historic producers. The latter two properties are the subject of intense activity.

The Keeley and Frontier mines were originally developed separately but combined in 1961. Their heydays were 1922 and 1931 as silver miners. Between their openings in 1908 and closure in 1965, together they produced 3.3 million lb. of cobalt and 19.1 million oz. of silver.

Drilling results released in December 2017, highlighted 0.12% cobalt over 5.5 metres including 0.68% cobalt over 0.34 metre in the Woods vein system. The Woods and Watson veins accounted for 80% of the output in the southern area of the Cobalt camp, noted First Cobalt. Grades exceeding 1% cobalt over 0.42 metre were intersected in the KeeleyCo No. 1 vein and 0.6% over 0.38 metre in the Keeley­­Co No. 2 vein; the two veins are two metres apart and interpreted as being parallel structures to the Woods vein.

First Cobalt also intersected zinc and lead as part of a hydrothermal halo around the vein systems, something the company said had not been reported before. Two drill programs are under way at the old Bellellen mine, which began operations in 1909. The ore contained a high proportion of cobalt relative to silver, and the lackluster silver production led to its closure in 1943. The 12.3 tonnes of ore recovered graded 9.25% cobalt and 11.55% nickel. One of the drill programs will target the north-south trending Bellellen vein system as well as the northeast trending Frontier No. 2 vein system.

In January First Cobalt reported promising drill results from the Wood Extension target, just north of Keeley- Frontier. Highlights included 0.57% cobalt and 1.4% nickel over 0.4 metre from a new vein between Woods and Watson. Another hole returned 0.34% cobalt over 0.4 metre that may be an extension of the Watson vein system.

First Cobalt’s 2018 drill program also includes at least 20,500 metres at central and northern properties as well as the 3,000 metres for Bellellen and Keeley-Frontier.

Besides the large portfolio of exploration properties and former silver mines, First Cobalt now owns the small cobalt refinery that formerly belonged to Cobalt One. The refinery is the only permitted cobalt refinery in North America capable of producing battery materials. It is located in Cobalt only 25 km from the Keeley-Frontier project.

So confident is First Cobalt in the metal’s outlook that it is funding a district- scale study with the Mineral Exploration Research Centre (MERC) at Laurentian University in Sudbury, Ont.

The program will examine the structural controls of mineralization in the Cobalt camp. The aim is to improve exploration targeting, create a regional map, and to create a 3-D model that includes field mapping and geochemical studies.

Canada Cobalt Works (formerly Castle Silver Resources)

Castle Silver owns the historic Castle and Beaver mines at Gowanda, about 85 km north of Cobalt. It, too, is prioritizing the hunt for cobalt over silver with hopes of redeveloping both mines beginning with level one at Castle. Consideration is being given to building a 600 t/d mill at Castle.

(Readers should note that the company proposed changing its name to Canada Cobalt Works in February.)

The former Castle silver mine operated intermittently between 1917 and 1989. During that time it produced 9.4 million oz. of silver and a little more than 376,000 lb. of cobalt from the No. 3 shaft. The property contains two more shafts and an adit. A bulk sample from the first level at Castle tested 1.48% cobalt, 5.7 g/t gold, and 46.3 g/t silver. A 14.8% cobalt concentrate was produced from it. Additional nearby bulk samples assayed up to 3.1% cobalt. More bulk sampling is planned.

Phase one drilling at Castle returned 1.55% cobalt, 0.65% nickel, 0.61 g/t gold and 8.8 g/t silver over 0.65 metre less than 5 metres from surface. Chip samples from a quartz-carbonate vein on level one assayed 1.06% cobalt, 5.3% nickel and 17.5 g/t silver.

The Beaver mine, close to the town of Cobalt, produced 7.1 million oz. of silver from 1907 and 1940. It is adjacent and connected at depth to the Temiskaming mine, which was a silver producer until 1989. Castle confirmed high grade mineralization in 2017 with selected hand-cobbled material at surface averaging 4.68% cobalt, 46.9 g/t silver, 3.09% nickel and 0.08 g/t gold. A 20-kg grab sample from the waste rock pile in 2013 tested 7.98% cobalt, 3.98% nickel and 1,246 g/t silver.

Castle Silver has an advantage over other cobalt hunters because it has created the proprietary Re-2OX process to produce cobalt sulphate intended to be suitable for battery sector customers. The process is also being tested for the recovery of cobalt, lithium and other metals from used computer and phone batteries.

Cobalt Power Group

Forsaking its earlier forays into graphite and copper, the Cobalt Power Group jumped into the cobalt rush in 2016 with the acquisition of the Smith property. It has been successfully raising funds and acquiring more properties ever since. The company now holds 87 sq. km and two active projects in the Cobalt camp and has set a 2018 exploration budget of $2.4 million.

After acquiring the Smith property in September 2016, Cobalt Power set about staking several adjacent properties, and began line cutting by the end of the year. Muck pile sampling was undertaken with promising results and Cobalt Power mounted a drill program in 2017.

The drill program intersected several high grade cobalt-silver zones with most holes showing multiple mineralized veins. The work also confirmed that The Smith property lies in the same stratigraphic and structural setting as the historic Deer Horn mine that reportedly produced 11 million oz. of silver and 100,000 lb. of cobalt until its closure in 1966.

Cobalt Power released highlights of the phase one, nine-hole Smith drill program in November 2017. The best cobalt assay was 1.71% and 42.5 g/t silver over 0.1 metre in hole 17-03. The same hole returned 0.07% and 0.23% cobalt. The holes also had good silver, gold, zinc, lead, nickel, and copper values.

South of the Smith property is the Canadian cobalt project near Silver Centre. The project includes the former Silver Eagle mine, which produced about 8,000 oz. of silver from a six-metre section around 1908. Several known cobalt occurrences have been identified on the Canadian claims and reported in the Ontario mineral deposit inventory files.

In August 2017, Cobalt Power established a strategic alliance with Hochschild Mining Holdings. Hochschild has the option to joint venture one of Cobalt Power’s properties of its choice and will appoint one director to the Canadian company’s board. Cobalt Power hopes to share in Hochschild’s experience in mining steeply dipping, narrow epithermal veins and also to tap into the larger company’s access to capital.

Quantum Cobalt

Of its three properties in the Cobalt camp, Quantum Cobalt is eager to test the historic Nippissing Lorrain mine. The property is located south of the town, near Silver Centre. It consists of two claims that produced cobalt, silver and nickel sporadically during the last century. Grades have been reported as high as 14.75% cobalt and 261 g/t silver.

For $1 million and 5 million common shares, Quantum Cobalt was granted an option to acquire 100% of the property in November 2017. By December, the company had completed a first pass of exploration consisting of prospecting, mapping and sampling. The work was focused on the Staples vein, which had historical production of 5,525 lb. of cobalt, 3,520 lb. of nickel and about 42,640 oz. of silver.

Also in Quantum Cobalt’s portfolio are the Kahuna and Rabbit cobalt-silver properties, near Silver Centre.

Kahuna, located 37 km south of the town of Cobalt, was mined in the 1920s, and sampling in the 1960s produced 5 tonnes of material grading 22% cobalt. Quantum Cobalt sent a crew to prospect, map and sample the property late last year. Samples from a historic rock pile assayed 10.59% and 2.22% cobalt.

The Rabbit property, 55 km south of Cobalt, is in the early stages of examination. Quantum Cobalt has taken rock and soil samples, the soil samples testing as high as 319.9 ppm cobalt and 0.31 g/t gold. Follow-up is planned.

Cruz Cobalt

Cruz Cobalt has four cobalt prospects in Ontario – Bucke, Coleman, Johnson and the newly acquired Lorrain properties. The company also holds properties in British Columbia, Idaho and Montana. Cruz has been most active on the War Eagle property in B.C., but with the recent acquisition of more claims in Northern Ontario, the company may be signalling its desire to return to the town of Cobalt.

Cruz recently completed an airborne survey of its Ontario properties and identified six targets.

The companies mentioned here are only a few of those hoping to cash in on the cobalt rush. And then there are the by-product producers such as Glencore and Vale.

The outlook for future cobalt demand is certainly bright as society moves away from fossil fuel consumption toward cleaner forms of energy. With global supply tight, there is every reason to expect new producers to contribute greatly to Northern Ontario in the near future.