Peter Epstein Blog | FIRST COBALT CORP. Secures MOU With Cobalt Giant Glencore On Restart Of Cobalt Refinery | Talkmarkets
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FIRST COBALT CORP. Secures MOU With Cobalt Giant Glencore On Restart Of Cobalt Refinery

Date: Wednesday, May 22, 2019 7:19 PM EDT

This is big, really big. I can’t say that it’s a surprise that Glencore might want to partner with First Cobalt Corp. (TSX-V: FCC) / (QTCQX: FTSSF), but it would be by far the best possible outcome for management’s strategic review of its 100%-owned Refinery in Ontario. Shareholders and prospective investors were understandably growing nervous about First Cobalt’s ability to deliver the restart funding with little or no additional equity issuance. Not because of management, because the battery metals sector is a complete disaster. Everyone knows that the Cobalt price is down a lot, did you know that Vanadium is down 73.5% in 6 months? This news alone, if this Agreement is consummated, could mark a turning point for select Cobalt juniors. 

Glencore adds tremendous credibility to First Cobalt’s Refinery

In addition to the potential for significant revenue (C$100M+ at US$20/lb. Cobalt) and good, very good or great EBITDA margins (depending on the Cobalt price), this would open A LOT of doors for the Company. They would instantly become the premier pure-play, North American Cobalt junior, not that there are many left to choose from. First Cobalt could solidify its leading position by acquiring other companies & assets. Might eCobalt Solutions(TSX: ECS) be first on the list !?! eCobalt might now prefer the embrace of First Cobalt over a takeover by Australian-listed Jervois Mining. I have no insight on this, I’m just reflecting on the recent acquisition of ECS shares. 

At the risk of getting ahead of myself, this is a MOU not a signed, sealed & delivered deal, I continue with the benefits of an Agreement between First Cobalt & Glencore. Glencore adds increased credibility to First Cobalt, the management team and the Refinery. It would be a supreme vote of confidence. Outside of North America, First Cobaltmight not be a very well known name. That would change overnight, in fact it might be changing as I write this sentence…. First Cobalt would attract additional world-class executives. The Company could pay a dividend! My quick math suggests that a 5% dividend yield would be possible from 50% of the cash flow on 2,000-2,500 tonnes of production at US$20/lb. Cobalt.

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