First Cobalt (TSX-V: FCC) CEO Trent Mell on the Overwhelming Support for US Cobalt Acquisition and Getting to Work Building the First Vertically Integrated North American Cobalt Producer
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of First Cobalt (TSX-V: FCC)(OTC: FTSSF), Mr. Trent Mell. Trent, how are you today?
Trent Mell: Hey, Gerardo. Thanks for the time. Really good, thank you.
Gerardo Del Real: Thank you for taking the time. I know you're in Vegas for the Cobalt Development Institute's annual conference. In light of all the recent events, can you please provide an update on just the vibe, what you're hearing, and how much attention you're getting compared to maybe a couple of years ago?
Trent Mell: Yeah, the conference is fun this year. I've been at this for less than two years. And if we can sort of wind the clock back three years ago, the Cobalt Development Institute is really dominated by the downstream players, you know, Daimler, Chrysler, and maybe some of the big miners like Glencore, but you've got a lot of the buyers, you know, Sumitomo and players like that, so the smaller miners like ourselves in exploration and development companies, we're the little minnows at the event.
The tide has really turned. We've got a lot of meetings booked, a lot of companies that are many, many times our size that are keen to meet. We're at a bit of an inflection point in the supply-demand equation whereby the smaller players like ourselves are kind of holding all the cards because cobalt is the chokepoint in a lot of these supply chains right now and people are really keen to hear what we're up to.
Gerardo Del Real: Let's talk about why you're holding all the cards, Trent. First off, congratulations, because you recently, on the 18th of May, I believe, had overwhelming support by shareholders of US Cobalt for the acquisition. What does that look like? Idaho has been in the news recently because the governor and a lot of the politicians in the state have been really vocal about mining and how welcome mining is in the state. Tell me about the acquisition. Tell me about what that looks like moving forward and what it means for shareholders.
Trent Mell: Well, certainly delighted by the support, 99.9% support, overwhelming support, and my shareholder base as well. But the company we're acquiring had to give their blessing, if you will, so we're going to close that at the very end of May and very excited to do so. Although candidly we're acting as though it's already happened. Our teams are talking. We had an eight hour off-site with the technical teams of the two companies and did a deep dive into our North American assets. That's our refinery as well as our Canadian assets and our future Idaho assets. And I'm coming out of that meeting really excited. I think the Idaho property that we've got our hands on right now is going to bring us to cash flow, to production a lot faster than was the case prior to production and, by bringing our refinery into the fore, it also allows that asset to get into production that much faster.
So it's a win-win. It's not just a win-win because scale matters in this business, access to capital and liquidity and all those things and big shareholders, but it's also a win-win because we've got complementary assets and it's bringing us really close to being the first vertically integrated North American cobalt producer. So the next leg of the stool for me is going to be talking to U.S.-based car companies, electronic companies, to try to make sure that whatever we produce in North America gets consumed into North American-made goods.
Gerardo Del Real: Now the asset in Idaho is the Iron Creek cobalt project. There's a historic resource in place, I believe it's 1.3 million tonnes grading 0.59% cobalt. Is that accurate, Trent?
Trent Mell: That is the historic resource and I would tell you after our meeting yesterday there is zero concern that the drilling we have done to date is going to prove up that resource and then some. This asset, you know, 0.59% would make it the highest grade cobalt deposit outside of the DRC in terms of a development asset or a producer. The grades you're seeing in Australia, kind of 0.1, DRC 0.3, 0.4, there's a few that are a little bit higher but I think I'd like to lower that grade and increase the tonnage. You know, get that down to a 0.5, a 0.45, which is still top two, three in the world, and get a lot more tonnage.
So you will see us in the next few months, by late September, come up with our maiden resource estimate and then we're likely going to keep drilling because there's so much up there that's been underexplored that we know about, that we want to confirm. Given that we're on patented property with a permitted refinery, once we've done our drilling our timeline to production could see us there in three to four years.
Gerardo Del Real: Sounds like you're at an inflection point, you mentioned it earlier. Is there anything else, Trent, that you'd like to add? I know you have a lot going on.
Trent Mell: It's exciting times. I think there's been a sell-off. I do think from the investor side, there's a real opportunity here. The lithium sell-off that we saw a couple of months ago took the cobalt names with it and that was premised largely by a report from Morgan Stanley. There was a report out by a single analyst who took the view that looking out a few years there's going to be an oversupply of lithium – a very contentious point of view – but putting that aside, the fact that all of the cobalt equity names then got sold off just makes absolutely no sense because there's no prospect of an oversupply in cobalt for the next decade. Not only is there an entry point there but there's also an opportunity, I believe, with First Cobalt. We're down 30% because our share transaction, it's an all-share transaction, that's not uncommon. You sell off the deal, there's some horsetrading, shorting of one, buying the other. Once we get this deal closed in about a week and a half's time, I am going to work very, very hard to get our stock back up to where it was pre-announcement.
Gerardo Del Real: Well, you understand the capital markets very well, Trent, and I would not be surprised to see the company make up that 30% deficit in a hurry.
Trent Mell: I agree and, yeah, watch us. We're heading into summer but we've got some good news flow. I'm blessed with a fabulous team and some great shareholders, so now the only thing that really keeps me up at night, it's not money, it's not the project, it's being able to execute our plan, our strategy in a timely fashion that satisfies my investors.
Gerardo Del Real: Trent, thank you so much for your time. I look forward to having you back on as you check those boxes here throughout the year.
Trent Mell: Thanks, Gerardo, have a great day.
Gerardo Del Real: Thank you.