The shovels are in the ground at the U.S.’s next major cobalt mine, thanks to a Vancouver company.
On Tuesday, Formation Metals (TSX:FCO) said mine site earthworks construction had started at its flagship Idaho Cobalt Project (ICP) in the U.S. Northwest.
“We knew it was only a matter of time, but it is still very gratifying to see heavy equipment turning dirt at the mine site,” said Mari-Ann Green, Formation’s CEO.
The company said construction activities would keep it on “that critical path to production for Q2 of next year.”
The ICP is expected to be the only cobalt producing mine in the U.S., which accounts for approximately 60% of global high-purity cobalt demand.
Cobalt is primarily used to create superalloys that serve the aerospace industry, though lately the metal has been popping up more and more in high-tech gadgets such as cellphones, laptops and iPads.
Both the European Union and the U.S. government consider the metal a strategic asset, given the small size of the market and limited European and North American production.
Ken Chernin, an analyst with Jennings Capital Inc., believes Formation’s Idaho project has four key advantages over competitors:
- low cost;
- a favourable location;
- ownership of a hydrometallurgical facility for cobalt purification; and
- a high purity deposit.
“The ICP is situated in the heart of the U.S. aerospace industry, which stands to be one of the fastest growing sectors in the coming years,” Chernin said in a recent research note.
He’s rated the company a ‘speculative buy’ with a 12-month price target of $2.60 per share.
At press time, Formation’s shares were up $0.01 to $1.06.
Joel McKay
Twitter:jmckaybiv