First Cobalt Refinery Project Ontario, Canada

Association for the Advancement of Cost Engineering (AACE) Class 3 Feasibility Study

July 9, 2020

Prepared for: First Cobalt Corporation 401 Bay St., 6th Floor, Toronto, ON, M5H 2Y4

Prepared by: Ausenco Engineering Canada 855 Homer St., Vancouver, BC, V6C 2X8

This report was prepared to summarise the results of the feasibility study related to the First Cobalt Refinery Project. This report does not constitute a feasibility study within the definition employed by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), as it relates to a stand-along industrial project and does not concern a mineral project of First Cobalt. As a result, disclosure standards prescribed by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) are not applicable to the scientific and technical disclosure in this report. Any references to scoping study, prefeasibility study or feasibility study by First Cobalt, in relation to the Refinery Project, are not the same as terms defined by the CIM Definition Standards and used in NI 43-101.

First Cobalt Refinery Project AACE Class 3 Feasibility Study

1 Executive Summary ...... 1 1.1 Property Description & Location ...... 1 1.2 Infrastructure & Physiography ...... 1 1.3 History ...... 2 1.4 Metallurgical Testwork ...... 3 1.5 Recovery Methods ...... 4 1.6 Site Infrastructure ...... 7 1.7 Market Studies & Contracts ...... 8 1.8 Environmental Studies, Permits & Social or Community Impact ...... 10 1.9 Capital Costs...... 12 1.10 Operating Costs ...... 12 1.11 Financial Evaluation ...... 14 1.12 Conclusions ...... 16 1.13 Recommendations for Future Work ...... 17

2 Introduction ...... 18 2.1 Terms of Reference & Purpose of this Report ...... 18 2.2 Units & Currency ...... 18 2.3 Property Location ...... 18 2.4 Property Description ...... 19 2.5 Block Map ...... 20 2.6 Property Identification Numbers ...... 21 2.7 Accessibility ...... 21 2.8 Climate ...... 26 2.9 Local Resources ...... 26 2.10 Infrastructure ...... 26 2.11 Physiography ...... 27 2.12 History ...... 28

3 Metallurgical Testwork ...... 31 3.1 Introduction ...... 31 3.2 Sample Composition ...... 32 3.3 Program 17070-01...... 34 3.4 Program 17070-03...... 41 3.5 Solvent Extraction Modelling ...... 57 3.6 Environmental Testing ...... 60

4 Refinery Design ...... 66 4.1 Introduction ...... 66 4.2 Design Basis ...... 66 4.3 Plant Design Criteria ...... 70 4.4 Feed Handling & Re-Pulping...... 71 4.5 Atmospheric Leaching ...... 72 4.6 Neutralisation & Dewatering ...... 72 4.7 ISX ...... 74

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4.8 CoSX ...... 76 4.9 Crystallisation & Drying ...... 77 4.10 Sodium Treatment ...... 78 4.11 Effluent Treatment & Dewatering ...... 80 4.12 Reagents ...... 81 4.13 Site Services ...... 83 4.14 Process Control ...... 85

5 Project Infrastructure ...... 86 5.1 Overall Site ...... 86 5.2 Roads ...... 86 5.3 Power Supply ...... 86 5.4 Water ...... 88 5.5 Logistics Requirements ...... 88 5.6 Tailings Storage Facility ...... 88

6 Market Evaluation ...... 96 6.1 Demand ...... 96 6.2 Supply ...... 98 6.3 Cobalt Hydroxide Market ...... 101 6.4 Cobalt Sulphate Market ...... 102 6.5 Price Forecasts ...... 104 6.6 Contracts ...... 110

7 Environmental Studies, Permitting and Community ...... 111 7.1 Environmental Baseline Studies ...... 111 7.2 Tailings & Water Management ...... 114 7.3 Social Setting, Consultation & Agreements ...... 116 7.4 Closure Requirements ...... 116

8 Capital Cost ...... 118 8.1 Estimate Basis ...... 119 8.2 Base Date & Currency ...... 120 8.3 Accuracy ...... 120 8.4 Estimating Methodology ...... 120 8.5 Site Construction Hours ...... 122 8.6 Freight Cost & Duties ...... 123 8.7 Construction Accommodation & Meals ...... 123 8.8 Spare Parts ...... 124 8.9 First Fills ...... 124 8.10 Vendor Support ...... 124 8.11 EPCM ...... 124 8.12 Third-Party Engineering Services, Testing & Inspection ...... 125 8.13 Owner's Costs ...... 125 8.14 Escalation ...... 126 8.15 Financing Costs ...... 126 8.16 Growth (Design Allowance) ...... 126 8.17 Management Reserve ...... 126 8.18 Capital Estimate Contingency...... 126

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9 Operating Cost ...... 127 9.1 Summary ...... 127 9.2 Basis of Operating Cost ...... 127 9.3 Labour ...... 128 9.4 Maintenance ...... 129 9.5 Power ...... 129 9.6 Reagents & Operating Consumables ...... 129 9.7 Laboratory & Assays ...... 130 9.8 General & Administrative ...... 130 9.9 Sodium Management ...... 131 9.10 Assumptions ...... 132 9.11 Exclusions ...... 132

10 Economic Analysis ...... 133 10.1 Cautionary Statement ...... 133 10.2 Methodology Used ...... 133 10.3 Financial Model Parameters ...... 134 10.4 Taxes ...... 134 10.5 Working Capital ...... 135 10.6 Closure Costs & Salvage Value...... 135 10.7 Economic Analysis ...... 135 10.8 Sensitivity Analysis ...... 139

11 Project Execution ...... 143 11.1 Project Execution Plan ...... 143

12 Interpretation and Conclusions ...... 146 12.1 Metallurgical Testing ...... 146 12.2 Recovery Methods & Refinery Design ...... 147 12.3 Relevant Results of Environmental Studies, Permitting & Community Impact...... 148 12.4 Opportunities and Risks ...... 150

13 Recommendations ...... 151 13.1 Ongoing Environmental, Permitting & Community Engagement Work ...... 151 13.2 Refinery Design ...... 151 13.3 Early Works ...... 152

14 References ...... 153

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TABLES Table 1-1. Cobalt Hydroxide Feed Sample Analysis ...... 3 Table 1-2. Cobalt Sulphate Composition ...... 3 Table 1-3. Key Results from the 17070-03 Testwork Program & Solvay Modelling ...... 4 Table 1-4. Process Design Criteria Summary ...... 7 Table 1-5. Summary of Existing & Update Requirements for CCRL Environmental Studies & Permits ...... 11 Table 1-6. Capital Cost Estimate ...... 13 Table 1-7. TSF Sustaining Capital Cost ...... 13 Table 1-8. Average Annual Operating Cost Summary ...... 14 Table 1-9. Summary of Project Economics ...... 15 Table 2-1. Table of CCRL PINs ...... 22 Table 3-1. Cobalt Hydroxide Sample Analysis ...... 32 Table 3-2. PSD of the 17070-03 Cobalt Hydroxide Feed Sample ...... 33 Table 3-3. 17070-03 Cobalt Hydroxide XRD Results – Relative Proportion of Crystalline Mineral Assemblages ...... 33 Table 3-4. 17070-03 Cobalt Hydroxide XRD Results – Mineral Compositions ...... 33 Table 3-5. 17070-01 RL3 Product Solution & Recovery after Neutralisation ...... 35 Table 3-6. Leach Recovery Kinetic Test Results ...... 36 Table 3-7. ISX Extraction Bulk Solution Treatment – 17070-01 DE2 Test ...... 37 Table 3-8. CoSX Extraction Bulk Solution Treatment – 17070-01 CE2 Test ...... 39 Table 3-9. CoSX Scrubbing Bulk Treatment – 17070-01 CB2 Test ...... 39 Table 3-10. CoSX Stripping Bulk Treatment – 17070-01 CS1 Test ...... 40 Table 3-11. Strip Purification Processed Liquor – 17070-01 Test ...... 40 Table 3-12. Cobalt Sulphate Composition ...... 41 Table 3-13. Recovery after Neutralisation for 17070-03 RL1 Test Relative to 17070-01 ...... 42 Table 3-14. 17070-03 Re-leach & Neutralisation Test Extraction Extents & Reagent Addition ...... 44 Table 3-15. ISX Bulk Raffinate Production – 17070-03 DE4 Test ...... 48 Table 3-16. ISX Stripping Results – 17070-03 DS1 & DS2 Tests ...... 50 Table 3-17. 17070-03 RL6 Residue Characterisation ...... 53 Table 3-18. Dynamic Thickening Testing Results – 17070-03 RL6 Residue...... 54 Table 3-19. Dynamic Thickening Underflow Rheology Characterisation ...... 55 Table 3-20. Vacuum & Pressure Filtration Results ...... 56 Table 3-21. Pressure Filtration Cake Washing Results ...... 57 Table 3-22. ISX Extraction (13.1 g/L Cobalt PLS) – Solvay Modelling ...... 58 Table 3-23. ISX (20 g/L Cobalt PLS) – Solvay Modelling ...... 58 Table 3-24. CoSX (13.9 g/L Cobalt ISX PLS) – Solvay Modelling ...... 59 Table 3-25. CoSX (20 g/L Cobalt ISX PLS) – Solvay Modelling ...... 60 Table 3-26. Geotechnical Moisture Content (ASTM D2216) for 17070-03 RL5 Residue ...... 61 Table 3-27. Applicable LC50s for the First Cobalt Refinery ...... 63 Table 3-28. Synthetic Solution Composition for Toxicity Testing ...... 63 Table 3-29. LC50 Results for Daphnia Magna ...... 63 Table 3-30. Composition of Synthetic Solution for Effluent Treatment Testwork ...... 64 Table 4-1. Key Refinery Process Design Criteria...... 70 Table 4-2. Consumption of Process Reagents & Consumables ...... 81 Table 4-3. Process Energy & Water Consumption ...... 83 Table 5-1. Refinery Trucking Requirements ...... 88 Table 6-1. Overview of Major Cobalt Miners ...... 99 Table 6-2. Typical Cobalt Sulphate Specifications ...... 109 Table 7-1. Existing Permits & Approvals for 12 t/d Operation ...... 115 Table 7-2. List of Required Permits & Approvals for 50 t/d Operation ...... 115

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Table 8-1. Capital Cost Estimate ...... 118 Table 8-2. TSF Expansion Cost ...... 119 Table 8-3. Type of Estimating per Discipline ...... 122 Table 9-1. Average Annual Operating Cost Summary ...... 127 Table 9-2. Operations & Maintenance Roster ...... 128 Table 9-3. Power Cost Summary ...... 129 Table 9-4. Reagents & Consumables Operating Costs by WBS Area ...... 130 Table 9-5. G&A Labour Roles ...... 131 Table 9-6. Annual G&A Costs ...... 131 Table 9-7. Sodium Management Operating Costs ...... 131 Table 10-1. Summary of Project Economics ...... 136 Table 10-2. Cash Flow Model ...... 137 Table 10-3. Pre-Tax Sensitivity ...... 139 Table 10-4. Post-Tax Sensitivity...... 140

FIGURES Figure 1-1. Post Tax Sensitivity, NPV ...... 16 Figure 1-2. Post-Tax Sensitivity, IRR ...... 16 Figure 2-1. Refinery Location Map ...... 18 Figure 2-2. Aerial View of the Refinery ...... 19 Figure 2-3. LRO Block Map – PINs around the Refinery ...... 20 Figure 2-4. Consolidated CCRL Property Position ...... 23 Figure 2-5. Regional Location Map ...... 24 Figure 2-6. Annotated Local Accessibility Map ...... 25 Figure 2-7. Ontario Northland Freight & Service Map ...... 27 Figure 3-1. Cobalt Hydroxide Feed for 17070-03 ...... 32 Figure 3-2. Neutralisation Profile for 17070-01 RL2 Test ...... 35 Figure 3-3. 17070-01 ISX pH Profile ...... 37 Figure 3-4. 17070-01 CoSX pH Profile ...... 38 Figure 3-5. Neutralisation Profile for 17070-03 RL3 Test ...... 43 Figure 3-6. 17070-03 ISX Extraction pH Profile ...... 45 Figure 3-7. 17070-03 ISX Extraction D2EHPA Concentration Profile ...... 46 Figure 3-8. 17070-03 ISX Extraction Phase Ratio Profile ...... 46 Figure 3-9. 17070-03 ISX McCabe-Thiele Diagrams for Manganese and Calcium Extraction...... 47 Figure 3-10. 17070-03 ISX Scrubbing pH Profile ...... 49 Figure 3-11. 17070-03 ISX Scrubbing Phase Ratio Profile ...... 49 Figure 3-12. 17070-03 CoSX Extraction pH Profile ...... 51 Figure 3-13. 17070-03 CoSX Extraction Cyanex 272 Concentration Profile ...... 51 Figure 3-14. 17070-03 CoSX Extraction Phase Ratio Profile ...... 52 Figure 3-15. 17070-03 CoSX McCabe-Thiele Diagrams for Cobalt Extraction...... 53 Figure 3-16. Thickener Underflow Solids Content vs. Yield Stress – 17070-03 RL6 Residue ...... 55 Figure 3-17. Standard Proctor Test Results for Synthetic Tailings Sample ...... 62 Figure 3-18. Effluent Treatment Testwork Results ...... 64 Figure 4-1. Overall Process Flowsheet ...... 68 Figure 4-2. Overall Refinery Layout ...... 69 Figure 4-3. Feed & Product Storage Area ...... 71 Figure 4-4. Bag Breaker & Re-pulper Area ...... 72 Figure 4-5. Neutralisation & Dewatering Area ...... 73 Figure 4-6. Solvent Extraction Building, Second Floor ...... 75

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Figure 4-7. Crystallisation & Drying Area ...... 77 Figure 4-8. Sodium Treatment Building ...... 79 Figure 4-9. Effluent Treatment Area & Vacuum Filtration Building, Second Floor ...... 81 Figure 5-1. Overall Project Site Plan ...... 87 Figure 5-2. TSF – Site General Arrangement, Ultimate Facility ...... 89 Figure 5-3. TSF – Typical Embankment Sections ...... 90 Figure 6-1. Global Cobalt Demand by End Use (tonnes) ...... 97 Figure 6-2. Global Electric Vehicle Sales & Penetration Rate Forecast, 2015-2040 ...... 97 Figure 6-3. Battery-Driven Cobalt Demand to 2040 ...... 98 Figure 6-4. Cobalt – From Mine to Electric Vehicles ...... 100 Figure 6-5. Cobalt Recycling Forecast ...... 101 Figure 6-6. Mined Cobalt Supply by Type (tonnes) ...... 102 Figure 6-7. Cobalt Refineries with Sulphate Production (tonnes) ...... 102 Figure 6-8. Refined Cobalt Supply (tonnes) ...... 103 Figure 6-9. Cathode Capacity Expansion Forecast ...... 103 Figure 6-10. Cobalt Prices ...... 104 Figure 6-11. Cobalt Supply Demand Balance, 2015 to 2040 ...... 106 Figure 6-12. Cobalt Price Forecast – Battery Metal (US$/t) ...... 106 Figure 6-13. Two-Year Cobalt Hydroxide Payability Factor ...... 107 Figure 6-14. Historical Cobalt Hydroxide Price (US$/t) ...... 108 Figure 6-15. Cobalt Metal & Cobalt Hydroxide Price Forecast (US$/t) ...... 108 Figure 6-16. Historical Cobalt Sulphate Prices (US$/t) ...... 110 Figure 6-17. Cobalt Battery Metal & Cobalt Sulphate Price Forecast (US$/t) ...... 110 Figure 10-1. Projected Life-of-Mine Cash Flows ...... 135 Figure 10-2. Pre-Tax Sensitivity ...... 141 Figure 10-3. Post-Tax Sensitivity ...... 142 Figure 11-1. Preliminary Execution Schedule ...... 145

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ABBREVIATIONS Abbreviation Description AACE Association for the Advancement of Cost Engineering International Ag Silver Al Aluminium A:O Aqueous to organic ratio ARD Acid Rock Drainage ASG Actual Specific Gravity Au Gold BMI Benchmark Mineral Intelligence °C Celsius CAD or C$ Canadian Dollar

CaCO3 Calcium Carbonate CaO Lime CAPEX Capital Cost Estimate CCR Cobalt Camp Refinery CCRL Cobalt Camp Refinery Limited CM Construction Management Co Cobalt CoSX Cobalt Solvent Extraction Cr Chromium Cu Copper D2EHPA Di-(2-ethylhexyl) phosphoric Acid DRC Democratic Republic of the Congo E1, E2 etc. Extraction Stage 1, Extraction Stage 2, etc. ECA Environmental Compliance Approval EDGM Earthquake Design Ground Motion EPCM Engineering Procurement and Construction Management Fe Iron FOT Free on Truck FS Feasibility Study G&A General and Administrative Ge Germanium g/L Grams Per Litre g/t Grams per tonne

H2SO4 Sulphuric Acid HMI Human Machine Interface HPC Hazard Potential Classification HSEC Health, Safety, Environment, Community HV High Voltage IAA Impact Assessment Act ICE Internal Combustion Engine IDF Inflow Design Flood I/O Input/Output IRR Internal Rate of Return ISW Industrial Sewage Works ISX Impurity Solvent Extraction IT Information Technology

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Abbreviation Description IX Ion Exchange KCC Katanga Mining kg Kilogram kg/t Kilograms Per Tonne km Kilometre KP Knight Piésold kt/a Thousand tonnes per annum kV Kilovolt kWh Kilowatt-hour lb Pound LC Lethal Concentration Li-ion Lithium Ion LRO Land Registry Office L/s Litres Per Second m3 Cubic Metre m3/a Cubic Metres Per Annum m3/d Cubic Metre Per Day m3/y Cubic Metres Per Year MDMER Metal and Diamond Mining Effluent Regulations MECP Ministry of Environment, Conservation and Parks METSIM Brand Name for Metallurgical Modelling Mg Magnesium mg/L Milligram per Litre MTO Material Take-off MVA Megavolt Ampere MFN Matachewan First Nation ML METAL LEACHING MNO Métis Nation of Ontario MuMi Mutanda Mining mV Millivolt Na Sodium NaOH Sodium Hydroxide NBCC National Building Code of Canada NCM Nickel-cobalt-manganese Ni Nickel NPV Net Present Value O/A Organic/Aqueous OEM Original Equipment Manufacturer OMNR Ontario Ministry of Natural Resources ON Ontario OPEX Operating Cost Estimate PCS Process Control System PEP Project Execution Plan PFS Prefeasibility Study PGA Peak Ground Acceleration pH Potential Hydrogen PIN Property Identification Number

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Abbreviation Description PLC Process Logic Control PLS Pregnant Leach Solution PPE Personal Protective Equipment ppm Parts Per Million PSD Particle Size Distribution PTTW Permit to Take Water PWQO Provincial Water Quality Objective Q1, Q2, etc. Quarter 1, Quarter 2, etc. QP Quotation Period Sc1, Sc2, etc. Scrubbing Stage 1, Scrubbing Stage 2, etc. SEI Story Environmental Inc. SG Specific Gravity Si Silicon SX Solvent Extraction TSF Tailings Storage Facility t/a Tonnes Per Annum t/d Tonnes Per Day t/h Tonnes Per Hour t/m3 Tonnes Per Cubic Meter TemFN Temagami First Nation TFN Timiskaming First Nation TSF Tailings Storage Facility TSS Total Suspended Solids µm Micron US$ or USD United States Dollar V Volt v/v Volume by Volume WBS Work Breakdown Structure WMA White Metal Alloy w/w Weight by Weight XRD X-Ray Diffraction Zn Zinc

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1 Executive Summary

This report was prepared by Ausenco Engineering Canada Inc. (Ausenco) for First Cobalt Corporation (First Cobalt) to summarise the results of the feasibility study related to the First Cobalt Refinery Project located near the town of North Cobalt, Ontario, Canada. The feasibility study evaluated the expansion of the refinery.

The project is 100% owned by Cobalt Camp Refinery Limited (CCRL), a subsidiary of First Cobalt. First Cobalt is a public company listed on TSX:V and traded under the symbol, “FCC”.

The refinery is currently under care and maintenance and is permitted to operate at a nominal throughput of 12 t/d and primarily produced cobalt carbonate during historical operations. The feasibility study evaluated modifying the existing flowsheet to treat cobalt hydroxide feed material to produce cobalt sulphate for the manufacturing of batteries for electric vehicles. The flowsheet changes were supported by bench-scale metallurgical testwork. It is proposed to refurbish and expand the refinery to produce 5,000 t/a (5 kt/a) cobalt (55 t/d nameplate, 50 t/d average).

The responsibilities of the engineering consultants and First Cobalt are as follows:

• Ausenco was commissioned by First Cobalt to manage and coordinate the work related to the report. Ausenco also developed the feasibility level design, cost estimating and economic analysis related to the refinery and associated infrastructure. • Story Environmental Inc. (SEI) was commissioned by First Cobalt to complete environmental planning, assessments and permitting activities. • Knight Piésold Ltd. (KP) was commissioned to complete a feasibility level design for a new tailings storage facility (TSF). • First Cobalt provided input to the project’s description, history, marketing and parameters for the economic analysis.

1.1 Property Description & Location

The refinery is located at approximately 47.40640° north and 79.62225° west in Lorrain Township near the town of North Cobalt, Ontario. The refinery is located approximately 1.5 km east of the town of North Cobalt, along Highway 567, locally referred to as “Silver Centre Road”.

The facility was permitted in 1996 with a nominal throughput of 12 t/d and operated intermittently until 2015, producing a cobalt carbonate product along with nickel carbonate and silver precipitate. The facility is located on 120 acres, with two settling ponds and an autoclave pond. The current footprint also includes a large warehouse building that once housed a conventional mill.

1.2 Infrastructure & Physiography

The refinery is located near the town of North Cobalt and the city of Temiskaming Shores. Temiskaming Shores is an amalgamation of the towns of New Liskeard, Dymond, Haileybury and North Cobalt. Geographically, the refinery is closest to the town of North Cobalt approximately

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140 km north of the city of North Bay. The refinery is accessed from the town of North Cobalt via an all-weather road from Silver Centre Road (Highway 567).

The region experiences a typical continental-style climate, with cold winters and warm summers. Daily average temperature ranges from -15°C in January to 18.3°C in July (Environment Canada, 2010). The coldest months are December to March, during which the temperature is often below -20°C and can fall below -30°C. During summer, temperatures can exceed 30°C. Snow accumulation begins in November and generally remains until the spring thaw in mid-March to April, with the average monthly snowfall peaking at 40 cm in January and a yearly average of 181 cm (Environment Canada, 2010).

Basic services are available locally in Temiskaming Shores, and further services are available in Sudbury. Sudbury is located 200 km by road southwest of the refinery, and is considered a world- class mining centre and major hub for retail, economic, health, and education sectors in Northern Ontario. Most of the resources for the restart of the refinery will likely be provided from the local townships, Sudbury, and North Bay areas.

Power for the refinery is provided from the grid by Hydro One through 115 kV and 230 kV transmission lines. The feeder to the refinery is 44 kV. Fresh water is sourced from the nearby Lake Timiskaming. Many roads, trails, and powerlines span the area. Ontario Northland Railway services the town of North Cobalt, linking North Bay with the rest of north-eastern Ontario. Ontario Northland’s rail line passes approximately 2 km west-northwest of the refinery road. An existing road provides access to the site.

The refinery is located within a well-established site. Local topography is dominated by Lake Temiskaming and the Montreal River, both of which are within the Ottawa River watershed. Topography within the property boundaries of the refinery is generally flat. General physiography is typical of the Precambrian Shield in north-eastern Ontario, with rocky, rolling bedrock hills with locally steep ledges and cliffs, separated by valleys filled with clay, glacial material, swamps and streams. Given the presence of the Clay Belt, some farms are present nearby. In this boreal region, coniferous and mixed-wood forests dominate. The main conifer species are black and white spruce, jack pine, balsam fir, tamarack and eastern white cedar. The predominant deciduous (hardwood) species are poplar and white birch. Swampy low-lying areas contain abundant tag alders.

1.3 History

In the 1980s, the location was the site of the Hellens-Eplett underground mine, which featured a traditional silver and cobalt mill that was quite common in the historic Cobalt Mining Camp. The property and mill were purchased by Cobatec Ltd. in the 1990s and construction of the refinery took place in 1994 and 1995. The integrated mining, milling and refining operation processed ore from the mine in the mill to produce concentrate, and then produce a refined cobalt and silver product from the concentrate in the refinery. Initial start-up was in 1996. The refinery was built with a nominal 12 t/d feed rate and made a cobalt-carbonate product from four feedstocks over different periods. Cobatec eventually shut down the refinery on January 2, 1999. The refinery was operational for approximately one of the three years between start-up and shutdown.

The refinery was subsequently owned and operated by several owners until First Cobalt entered into a 50-50 joint venture with Australian-listed Cobalt One Limited to acquire the refinery in 2017.

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The previous owners included:

• 1999-2003: Canmine Resources Corporation • 2003-2012: Yukon Refinery AG • 2012-2015: United Commodities • 2015-2017: Yukon Refinery AG • 2017-present: First Cobalt

1.4 Metallurgical Testwork

Metallurgical testing was completed at SGS Canada Inc. (SGS) between Q4 2018 and Q2 2020. The testwork program was managed by First Cobalt with input from Ausenco. The testwork was conducted in two phases, referred to as the 17070-01 and 17070-03 programs.

The programs evaluated two different cobalt hydroxide feed materials. The composition of each feed material is summarised in Table 1-1.

Table 1-1. Cobalt Hydroxide Feed Sample Analysis

Co Cu Fe Mn Mg Si Zn Ni Al Cr Program (%) (%) (%) (%) (%) (%) (g/t) (g/t) (g/t) (g/t) 17070-01 23.2 1.61 2.39 3.27 3.45 1.05 1,920 3,870 6,390 52 17070-03 29.2 0.46 0.12 4.85 5.67 0.77 403 9,410 1,200 <100

The 17070-01 sample had a lower cobalt content (23.2% w/w) than the 17070-03 sample (29.2% w/w), as well as higher levels of copper, iron, silica, zinc and aluminium impurities. The source of the 17070-01 was from an operation in the Democratic Republic of the Congo (DRC). The grade of cobalt hydroxide feeding the process is expected to average 30%; therefore, the 17070-03 sample better represents the expected refinery feed. The sample had higher concentrations of manganese, magnesium, and nickel impurities than the 17070-01 sample. The source of the 17070-03 sample was the Mutanda operation in the DRC and a mass of 570 kg (gross) was supplied.

The purpose of the 17070-01 campaign was to demonstrate that battery-grade cobalt sulphate could be produced from a cobalt hydroxide feedstock. The definition of a battery-grade cobalt sulphate product was based on specifications received by First Cobalt from potential end users. The campaign was conducted from Q4 2018 to Q2 2019. Scoping-level tests were conducted including leaching, neutralisation, single batch solvent extraction contacts, ion exchange, manganese precipitation, and evaporation to produce a final cobalt sulphate crystal.

The program achieved a high purity cobalt sulphate product with a cobalt grade of 20.8% w/w, as shown in Table 1-2.

Table 1-2. Cobalt Sulphate Composition

Unit Co Mn Mg Ca Zn Ni Cu Cobalt Sulphate g/t 20.8% 42 49 59 <7 80 11 Ratio of Co/element - 1 4,930 4,270 3,525 29,710 2,600 1,8570

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The 17070-03 campaign was conducted using the results of the 17070-01 program as a baseline. The purpose of the 17070-03 program was to provide data for the feasibility study, such as process conditions and operating targets for the various unit operations. The tests conducted included re-leaching and neutralisation, impurity solvent extraction (ISX), cobalt solvent extraction (CoSX), solid/liquid separation testing, environmental, and tailings testing.

Following the solvent extraction testwork performed at SGS and METSIM™ modelling, results were provided to Solvay to evaluate the solvent extraction processes on a continuous basis. The modelling results were incorporated into the basis of design.

Environmental testwork was also conducted to determine operating parameters for the effluent treatment circuit. Synthetic solutions were prepared based on compositions predicted in the METSIM™ model and were supplied to SEI for effluent treatment testing and Aquatox Testing and Consulting Inc. for toxicity testing.

Key results from the testwork program and Solvay modelling are listed in Table 1-3.

Table 1-3. Key Results from the 17070-03 Testwork Program & Solvay Modelling

Description Unit Value Re-leach and neutralisation recovery % 93.5 Neutralisation pH - 5.0 Average sulphuric acid addition kg/t (dry basis) 633 Limestone addition kg/t (dry basis) 161 ISX configuration extract / scrub / strip 3 / 2 / 2 ISX extractant concentration % 20 ISX cobalt recovery (to extraction raffinate) % 99.6 CoSX configuration extract / scrub / strip 3 / 6 / 2 CoSX extractant concentration % 40 CoSX cobalt recovery (to strip solution) % 99.6 Effluent treatment final pH - 11.0 Sodium concentration in effluent mg/L 2,000

Based on the results of the Solvay modelling, it was determined that ion exchange and manganese precipitation would not be required.

The testwork demonstrated that high-purity, battery-grade cobalt sulphate can be produced from the cobalt hydroxide samples that were provided. The overall cobalt recovery of the process is 93% based on the testwork results conducted.

1.5 Recovery Methods

The process flowsheet for the refinery was primarily derived from the results of the 17070-03 testwork program, METSIM™ modelling, and Solvay solvent extraction modelling. At a high level, the objectives of the process are to solubilise cobalt through leaching with sulphuric acid, remove impurities to concentrations meeting the definition of battery grade, and crystallise cobalt sulphate.

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The process design is consistent with other operations, including:

• Vale, Long Harbour: impurity solvent extraction followed by cobalt solvent extraction • WMC, Bulong Refinery: cobalt solvent extraction with Cyanex 272 followed by sulphide precipitation and impurity solvent extraction with D2EHPA • Finland, Terrafame: crystallisation of high purity cobalt sulphate heptahydrate

Cyanex 272 was also used for cobalt extraction in the previous refinery flowsheet.

The process design also considered maximising the re-use of existing infrastructure and equipment where practical. A field investigation conducted in Q3 2019 determined the condition and characteristics of the on-site equipment, such as size, materials of construction, and required refurbishment.

1.5.1 Process Description

Cobalt hydroxide is received on site at 66% w/w moisture in 1-tonne bulk bags and stored in the warehouse. The bags are lifted by crane and broken in a bag breaker, and the material flows by gravity into a re-pulper where it is mixed with recycled raffinate into a slurry and stored in a feed tank.

The slurry is pumped to three leach tanks and leached with sulphuric acid at a pH of 1.5 to solubilise cobalt and other metals. The solution is then pumped to the neutralisation tanks, where the pH is adjusted with limestone to precipitate impurities such as iron, aluminium, and chromium. The slurry is dewatered in a cyclone, and the overflow reports to a cooling tower where the solution is cooled to precipitate additional gypsum. The cooled slurry reports to a residue thickener, and the thickener underflow reports to ISX.

The underflow of the thickener and cyclone report to a vacuum filter, where a filter cake is produced and trucked to the TSF. Washing stages assist in the recovery of soluble cobalt, and the filtrate reports back to the residue thickener. A portion of the cyclone underflow is also recycled to act as seed material in neutralisation.

Prior to ISX, the solution is re-heated prevent subsequent gypsum precipitation and filtered to remove remaining solids. The solution is then processed through extraction, scrubbing, and stripping stages to separate copper, zinc, manganese, and calcium impurities. The cobalt-rich extraction raffinate reports to CoSX, while the impurities report to effluent treatment.

For both ISX and CoSX, pH adjustment is achieved by adding sodium hydroxide in the extraction stages, and sulphuric acid in the scrubbing and stripping stages.

The ISX raffinate reports to CoSX and is processed through extraction, scrubbing and stripping stages to separate nickel and magnesium impurities from the cobalt. The CoSX raffinate is either recycled to the process or sent for sodium treatment, while the cobalt-rich strip solution is sent to crystallisation.

Sodium is recovered from the CoSX raffinate by a falling film evaporator and forced circulation crystalliser as sodium sulphate. The resulting solid sodium sulphate is disposed of off site.

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The strip solution from CoSX reports to the forced circulation mechanical vapour recompression cobalt sulphate crystalliser. Cobalt sulphate is crystallised and subsequently dewatered in a thickener, centrifuge, and fluid bed dryer. The dry product is then bagged and stored in the warehouse prior to shipment.

Strip solution from ISX and other waste streams report to the effluent treatment circuit. Lime slurry is added to raise the pH to 11 and precipitate soluble metals from the solution in two tanks, which provide a residence time of 1 hour. The resulting slurry reports to a thickener, and the thickener underflow reports to a vacuum belt filter. The filter cake is trucked to the TSF, and filtrate returns to the thickener. The thickener overflow is treated with sulphuric acid to reduce the pH to 8.5 prior to discharge or recycle to the process.

The reagents used in the process include:

• flocculant, including a mixing and dosing system for the residue and effluent thickeners • organic solvents, comprising of Cyanex 272, D2EHPA, and a diluent • sulphuric acid, including a storage tank, dilution, and dosing system

• limestone (CaCO3), including a storage silo, mixing system, and ring main • lime (CaO), including a storage silo, slaker, and ring main • sodium hydroxide, including a heated storage tank, dilution, and dosing system

Services supplied to the process include:

• filtered water • fire water and fire suppression systems • gland water • potable water • plant and instrument air • low pressure air • natural gas

1.5.2 Process Design Criteria

Key process design criteria are summarised in Table 1-4. The design criteria are based on client supplied data, testwork, vendor data and modelling, industry standards, and Ausenco’s in-house database.

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Table 1-4. Process Design Criteria Summary

Parameter Unit Value Dry Throughput, Average t/d 50 Availability % 91.3 Feed Moisture % w/w 66 Feed Cobalt Content % w/w 30 Feed Supply Form - 1-tonne bulk bags Feed Storage Capacity days 5 Target Leach Solution Cobalt Tenor g/L 20 Leach Residence Time h 1 Leach Operating Temperature, Range °C 45-50 Neutralisation Operating pH - 5.0 Neutralisation Residence Time h 6 Cooling Tower Target Temperature °C 30 Iron Residue Filter Cake Moisture % w/w 25 ISX Feed Temperature °C 40 ISX Stages extract / scrub / strip 3 / 2 / 2 ISX Extractant Concentration % v/v 20 ISX Settler Flux m3/h/m2 3.5 CoSX Stages extract / scrub / strip 3 / 6 / 2 CoSX Extractant Concentration %v/v 40 CoSX Settler Flux m3/h/m2 3.5 Target Product Grade, Cobalt % w/w 20.5 Target Cobalt Production t/a 5,000 Target Effluent Treatment pH - 11 Effluent Treatment Residence Time h 1 Effluent Treatment pH for Discharge - 8.5 Effluent Treatment Filter Cake Moisture % w/w 25 Maximum Wastewater Concentration, Sodium mg/L 2,000

1.6 Site Infrastructure

The major project facilities include the existing refinery building with expanded facilities, a new solvent extraction building, new sodium treatment building, and a new TSF with associated water ponds.

Power to the refinery is provided via an existing 44 kV feeder from the Hydro One grid. It is then stepped down via a 4 MVA 44kV/600V transformer for distribution throughout the facilities.

Fresh water is supplied to the refinery from Lake Timiskaming by an overland pipeline and pumping system. The pumphouse contains two freshwater pumps in a duty/standby

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configuration. Water is pumped 3 km through a buried pipeline to the project site, where it is stored in the filtered water tank.

The TSF will provide secure storage for filtered tailings and temporary storage for process water and direct precipitation. The TSF has been designed to protect groundwater and surface waters during operations and after closure.

1.7 Market Studies & Contracts

First Cobalt retained Benchmark Mineral Intelligence (BMI), a London-based market intelligence firm for the electric vehicle supply chain, to prepare a market study.

First Cobalt has not entered into any material contracts relating to the project.

1.7.1 Demand

Cobalt is used in a range of applications, but the largest single market is lithium-ion (Li-ion) batteries. The three primary segments for Li-ion batteries are consumer electronic devices, electric vehicles, and both stationary and grid energy storage. All three segments have a strong growth profile over the coming years and as such, the market for Li-ion batteries is expected to grow sharply. Electric vehicles are forecast to be the largest market for Li-ion batteries.

Growth in cobalt demand through 2040 will be almost entirely dominated by the battery sector, fuelled predominantly by increased electric vehicle penetration uptake. Demand growth is forecast to outpace the ability of suppliers to keep up by the mid-2020s. It should be expected that cobalt producers will not only be able to sell their products, but that strong prices should be able to be commanded due to the predicted shortfall. The most important electric vehicle market globally is China, due to its population, government incentives and projected growth of their vehicle market. Gigafactory (battery production) capacity is forecast to expand rapidly over the next decade to support the rapidly evolving electric vehicle market.

As a result, it is forecasted that cobalt demand from nickel-cobalt-manganese (NCM) batteries will increase from approximately 20,000 tonnes in 2019 to over 730,000 tonnes in 2040. The NCM 811 chemistry will begin to take over the market, increasing market shares from 5% in 2019 to 60% by 2040. The shift away from the higher-cobalt NCM 622 cathode that is widely used in electric vehicle batteries today will be more than offset by higher electric vehicle penetration and larger battery packs.

1.7.2 Supply

Cobalt is mainly produced as a by-product from copper and nickel operations. Approximately 74% of mined cobalt originates from the copper operations of the African Copper Belt, in the DRC. Much of that production is exported to China, which is responsible for 67% of global refined supply and a much higher proportion of refined cobalt sulphate material, at around 79% of the global production, which is used in batteries. DRC is forecast to maintain its dominance over global mined cobalt supply, remaining at over 70% of production until 2025.

Cobalt refining typically takes place away from mine sites. Vale, Glencore and Sherritt are among some of the mining companies that refine cobalt from their own mining operations, but they produce metallic cobalt products. None of them refines cobalt sulphate, which is a key input for

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the battery market. China is the largest refiner of cobalt and has increased its refinery production by ~34,000 tonnes from 2015 to 2019. China now accounts for 67% of refined cobalt production, up from 53% in 2015. It also controls 79% of the world’s cobalt sulphate production. By 2040, China is forecast to continue to dominate known refining capacity, remaining at around 68% but increasing in the case of sulphate to about 83%. The majority of the raw material will come from the DRC.

Outside of China, refined cobalt production has also increased in Finland (Norilsk & Freeport) and Norway (Glencore). In the rest of the world, refined cobalt production has declined as operations have been shut down or struggled in the face of increased competition from China.

Besides First Cobalt, there are no plans for new cobalt refineries outside of China. However, with the current focus by governments and industry on the battery sector, supply chains are expected to develop outside of China. Putting aside permitting considerations, refineries can often be built and commissioned in 18-36 months.

1.7.3 Cobalt Hydroxide Market

Cobalt hydroxide is the largest intermediate product market for refiners, with most of this material coming from the DRC. It is likely that any cobalt hydroxide sourced by First Cobalt will originate in the DRC, as this is the source of the majority of production.

Given the abundance of cobalt hydroxide intermediate product, many refinery flowsheets are specifically designed to receive this type of feed. First Cobalt’s key competitors in securing hydroxide feed will be the Chinese refineries. Outside China, the main refineries purchasing cobalt hydroxide are Umicore (refineries and smelters in Belgium and Finland), Norilsk (mines in Russia and refinery in Finland), and Sumitomo (metal and chemical in Japan).

1.7.4 Cobalt Sulphate Market

Cobalt sulphate demand has significantly grown, driven by demand from lithium-ion cathode producers, with supply keeping pace due to the ability of existing Chinese refineries to expand their plants. Given the concentration of refining in China, First Cobalt may not find it difficult to identify interested buyers for the refined material.

Crucially for First Cobalt, almost all automotive producers outside of China would like to source cobalt sulphate either in their own region, or from suppliers outside of China. Furthermore, ex- China supply is currently small (non-existent in North America), with OEMs and chemical firms like BASF competing for product.

1.7.5 Cobalt Metal Forecast Price

BMI’s long-term cobalt price forecast is approximately $59,100/t or $26.81/lb. Over the next several years, it is expected that the cobalt price will steadily increase and exceed the long-term price from 2024 to 2030.

First Cobalt has adopted a lower long-term price assumption of $25/lb ($55,116/t) for its financial modelling, which is considered reasonable, conservative and well supported by BMI’s market data.

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1.7.5.1 Cobalt Hydroxide Pricing

First Cobalt intends to purchase third-party cobalt hydroxide that could contain 20% to 30% cobalt. BMI has produced a cobalt hydroxide price forecast for First Cobalt, making the following key assumptions regarding the pricing mechanism, quotation period, and quality:

• cobalt content: 20% cobalt • payable cobalt content: 70% of contained cobalt • penalty elements: none • quotation period: fixed as month of delivery • base cobalt metal price: benchmark battery-grade cobalt forecast

1.7.5.2 Cobalt Sulphate Pricing

First Cobalt will produce cobalt sulphate for the battery market, specifically for lithium-ion cathode producers. Cobalt sulphate for the battery market is typically priced at a premium, in terms of contained cobalt, to the battery-grade cobalt metal price. The price reported is based on 20.5% cobalt and 100% payability.

1.8 Environmental Studies, Permits & Social or Community Impact

First Cobalt retained SEI in 2019 to review the environmental baseline studies previously completed for the refinery, and to identify the additional baseline studies required to support environmental approvals for the proposed expansion. This gap analysis identified the need for additional baseline studies, a new permit, and amendments to existing approvals for the production of 5 kt/a of cobalt (see Table 1-5). Existing and ongoing environmental baseline studies to support the refinery expansion will evaluate the following: atmospheric environment (noise), hydrology, surface water quality, groundwater quality, terrestrial environment, and aquatic environment.

First Cobalt has regularly kept local municipalities and Indigenous communities apprised of their activities. Local municipalities with an interest in the project include the Township of Coleman, the Town of Cobalt, and the City of Temiskaming Shores. CCRL has engaged the following Indigenous communities to keep them informed and obtain their input on recommencing operations at the refinery, and the Permit to Take Water for the project:

• Matachewan First Nation (MFN) • Temagami First Nation (TemFN) • Timiskaming First Nation (TFN) • Métis Nation of Ontario (MNO)

CCRL is committed to continuing their engagement and consultation activities with stakeholders and Indigenous communities. All engagement and consultation activities related to the project will continue to be entered into the Record of Consultation.

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Table 1-5. Summary of Existing & Update Requirements for CCRL Environmental Studies & Permits

Approval/Legislative Requirement Required Permit/Study Update Status

Amendment of the existing Industrial Sewage Works (ISW) Amendment of the ISW ECA to: ISW ECA amendment and the required Assimilative Capacity Study not yet completed. ECA with the MECP for discharge of industrial sewage from • account for the increased facility throughput and associated industrial sewage treatment and Results of the assimilative capacity assessment of Lake Timiskaming are expected to be the current 12 t/d facility to Slate Creek (not to exceed discharge to Lake Timiskaming, estimated at 2,000 m3/d favourable due to the lake’s large size – the proposed industrial sewage discharge will 735 m3/d) • change discharge location to Lake Timiskaming from Slate Creek; Slate Creek does not have represent approximately 0.01% of the estimated 7 day average low flow with a statistical adequate capacity to assimilate the expanded industrial sewage volume recurrence interval of 20 years (7Q20) low flow in the lake (part of the Ottawa River system). • integrate required changes to ISW, including tailings and water management facilities Historical water quality data exist for Slate Creek, Farr Creek and Lake Timiskaming. An Completion of an Assimilative Capacity Study to establish that the expanded industrial sewage expanded surface water quality program for these waterbodies was initiated in 2019. discharge to Lake Timiskaming can be assimilated without a negative impact on this surface The surface water quality data supports completion of the Lake Timiskaming Assimilative water resource. Capacity Study. Collection of monthly surface water quality samples to establish the water quality variability in Farr Aquatic studies specific to the discharge point to Lake Timiskaming have not been Creek, Slate Creek and Lake Timiskaming. completed. There are existing aquatic baseline studies for Slate Creek and there are available Aquatic studies (bathymetry and identification of any sensitive fish habitat in the area of the studies completed by others for Lake Timiskaming. proposed discharge to Lake Timiskaming) may be required to support the ISW ECA amendment. Quarterly groundwater monitoring has occurred and will continue, as required by the existing Continuation of the quarterly groundwater quality monitoring conducted as part of the existing ISW ISW ECA. Cobalt concentrations in the groundwater contained in two monitoring wells were ECA and proposed construction and monitoring of additional groundwater monitoring wells to above the Table 9 Ontario Groundwater Standards. These wells are located downgradient of account for construction of expanded facilities. an identified seep from the Autoclave Pond. The seep was repaired, and over time, it is expected that the cobalt concentrations in the groundwater will decline.

Amendment of the existing Air and Noise Environmental Amendment of the Air and Noise ECA to account for the increased facility throughput and for the Background noise studies completed in fall 2019 and winter 2020. Compliance Approval (ECA) with the Ministry of Environment, associated air and noise emissions to the environment. Data will be used to complete a Noise Impact Assessment for the ECA amendment. Conservation and Parks (MECP) for 12 t/d to accommodate Study of background noise levels at the nearest receptors. the CCR expansion to production of 5 kt/a of cobalt Amendment to existing Air and Noise ECA not yet complete.

Permit to Take Water (PTTW) – new permit required from Completion of a PTTW application and the supporting Surface Water Study for taking water from The PTTW application was submitted to MECP in March 2020. The proposed taking of water MECP Lake Timiskaming. from Lake Timiskaming (0.019% of the lake’s average 7Q20 low flow) will have a negligible impact.

Adherence to Ontario Endangered Species Act Completion of a natural heritage assessment for the proposed tailings facility expansion. Natural heritage assessment was completed in the area proposed for tailings facility expansion in 2019. No significant wildlife habitat or other natural heritage features were If removal of existing refinery structures is proposed, conduct targeted surveys for Species at Risk, identified in the expansion area. particularly bats and barn swallows which may use on-site structures as habitat.

Amendment of the Closure Plan on file with the Ministry of Amendment to the existing Closure Plan and associated financial assurance is required to account Closure Plan not yet amended. Energy, Northern Development and Mines (as required by for the expanded operations. Specific items to be addressed will be: decommissioning and To be completed and filed prior to initiation of operations. Ontario Regulation 240/00: Mine Development and Closure removal/rehabilitation of added buildings, equipment, machinery, water and tailings management under Part VII of the Act) facilities; rehabilitation/ revegetation of new corridors, roads, and laydown areas; and expansion of existing physical, chemical and biological monitoring programs.

Work Permits from the Ministry of Natural Resources and Work permits may be required should any work activities be proposed to occur on Crown land or To be assessed, and permits obtained as required. Forestry along the shorelines or within lakes and rivers. A work permit will be required to construct the new industrial sewage discharge to and into Lake Timiskaming.

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1.9 Capital Costs

The capital cost estimate to expand the refinery is inclusive of the scope of facilities described in Chapter 8. The estimate is based on process design criteria, plant mass balance (METSIM™ model), process flow diagrams, preliminary general arrangement drawings, equipment sizing information, and field program inspection and measurements.

The capital cost estimate was prepared in accordance with an AACE Class 3 (Feasibility Study) estimate as defined by Ausenco’s capital cost estimating guidelines. The capital costs are presented in Q1 2020 US dollars (USD) and have an accuracy of ±15%.

Information obtained from the field program and preliminary general arrangement drawings enabled the assessment of preliminary material take-off (MTO) quantities and factors for earthworks, concrete, steelwork, mechanical, electrical and instrumentation for the refinery.

Major equipment pricing and equipment refurbishment costs were based on multiple budgetary quotations for the refinery restart that were evaluated for technical compliance, and minor equipment pricing was derived from Ausenco’s in-house data for recent relevant projects.

Installation costs were based on quoted labour hours and rates received from preferred contractors within the province of Ontario. The quotes were based on scopes of work that included preliminary design information including drawings, equipment lists and MTOs.

Indirect costs include contractor indirects, EPCM labour costs and indirects, spares and first fills, vendor representatives, and freight. The EPCM costs for labour and expenses were estimated based on a dedicated staffing plan and applied across the project duration. The costs for contractor indirects, spares and first fills, and vendor reeeepresentatives were based on quotes from equipment suppliers, reagent suppliers, and installation contractors. The freight costs were based on quotes from equipment suppliers when provided in their proposals, with the remainder of costs factored based on the geographical location of the factory.

The capital costs associated with the 5 kt/a refinery restart are summarised in Table 1-6 on the following page.

Subsequent lifts for the new TSF are captured under sustaining capital costs and are summarised in Table 1-7.

1.10 Operating Costs

The operating cost estimate is presented in Q1 2020 US dollars (USD or US$). The estimate was developed to have an accuracy of ±15%. The estimate includes processing, general and administration (G&A), and effluent disposal costs.

The operating cost estimate is inclusive of on-site costs from receipt of cobalt hydroxide and consumables through to product packaging and effluent discharge. The operating costs begin on the first day of refinery operation, after wet commissioning and feed commissioning. The estimate is based on a refinery availability of 91.3% or 8,000 operating hours per year.

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Table 1-6. Capital Cost Estimate

Description Value (US$M) Mechanical Equipment 13.5 Electrical Equipment (including bulks) 2.2 Piping 3.2 Architectural 1.3 Platework & Tanks 5.8 Structural Steel 1.6 Instrumentation Equipment (including bulks) 1.6 Tailings Storage Facility 1.2 Concrete 0.8 Sodium Removal 9.4 Other Directs 0.8 Subtotal Direct Cost 41.4 Engineering Procurement Construction and Management (EPCM) 3.9 Spares & First Fills 2.5 Field Indirects 1.5 Other Indirects 1.5 Subtotal Indirect Cost 9.4 Owner’s Costs 1.0 Contingency 4.2 Total 56.0

Table 1-7. TSF Sustaining Capital Cost

Description Value (US$M) TSF – Stage 2 0.4 TSF – Stage 3 0.2

The operating cost estimate includes the following costs:

• labour for operating, maintenance and supervision • fuels, reagents, consumables and maintenance materials • fuels, lubricants, tires and maintenance materials for operating and maintaining mobile equipment and light vehicles • lease costs associated with mobile equipment • operating costs for the on-site laboratory • power supply costs • site G&A costs

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Operating costs for the average operating year are shown in Table 1-8. The average annual operating cost is $30.737 M, or $2.72/lb of produced cobalt.

Table 1-8. Average Annual Operating Cost Summary

Average Operating Cost Unit Cost Item (US$ k/a) (US$/lb Co) Labour 2,795 0.25 Maintenance 942 0.08 General and Administration 1,420 0.13 Subtotal (Fixed Costs) 5,157 0.46 Power 2,211 0.20 Reagents and Operating Consumables 14,808 1.31 Lab and Assay Costs 117 0.01 Off-site Disposal 8,444 0.75 Subtotal (Variable Costs) 25,581 2.26 Total 30,737 2.72

1.11 Financial Evaluation

The economic analysis was performed assuming an 8% discount rate over an initial 11-year period. The pre-tax NPV discounted at 8% is US$192 M; the internal rate of return (IRR) is 64%; and payback period is 1.6 years. On an after-tax basis, the NPV discounted at 8% is US$139 M; the IRR is 53%; and the payback period is 1.8 years. A summary of project economics is provided in Table 1-9.

The project’s closure cost has been estimated at $6 M and the salvage cost is assumed to be 10% of initial capital expenditure (i.e., $6 M) and is assumed to be incurred in the year after final production.

Figure 1-1 and Figure 1-2 show the project’s post-tax sensitivity results for the NPV and IRR, respectively.

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Table 1-9. Summary of Project Economics

General Unit LOM Total / Avg. Cobalt Price US$/lb 25 Life of Project years 11 Cobalt Hydroxide Payability % 70% Production LOM Total / Avg. Mill Head Grade %Co 30.0% Mill Recovery Rate % 93.0% Total Cobalt Recovered klb 123,576 Total Average Annual Production klb 11,234 Operating Costs LOM Total / Avg. Processing Cost US$/lb Co $2.60 G&A Cost US$/lb Co $0.12 Total Operating Costs US$/lb Co $2.72 Transportation Cost US$/lb Co $0.17 Capital Costs LOM Total / Avg. Initial Capital US$M 56.0 Life-of-Project Sustaining Capital US$M 0.6 Salvage Value US$M 5.6 Closure Cost US$M 5.6 Financials Pre-Tax NPV (8%) US$M 192 IRR % 64% Payback years 1.6 NPV (8%) / Initial Capital : 3.4 Financials Post-Tax NPV (8%) US$M 139 IRR (%) % 53% Payback (years) years 1.8 NPV (8%) / Initial Capital : 2.5

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Figure 1-1. Post Tax Sensitivity, NPV

Source: Ausenco, 2020.

Figure 1-2. Post-Tax Sensitivity, IRR

Source: Ausenco, 2020.

1.12 Conclusions

The metallurgical testwork programs and process modelling demonstrated that cobalt sulphate meeting battery grade specifications at 20.5% w/w cobalt can be produced from the cobalt hydroxide feed material using the proposed flowsheet. Subsequent engineering also determined that large portions of the existing process equipment and infrastructure at the First Cobalt Refinery can be incorporated into the revised design. Additional buildings and areas are required to fully support production at the expanded throughput rate.

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Following completion of the process model, the requirement for sodium treatment was identified based on a review of published literature and verified with toxicity testwork. A treatment system was included in the process design, and costs estimates were developed for off-site disposal.

The overall financial analysis of this feasibility study demonstrates that the project has positive economics. It is recommended to continue developing the project to early works in support of subsequent detailed engineering.

1.13 Recommendations for Future Work The work programs described below are recommended to advance project development. • Ongoing environmental, permitting and community engagement work: o continue with the surface water and groundwater baseline data collection programs to support the required permitting and approvals processes o complete the Noise Impact Assessment and Emission Summary and Dispersion Modelling Report to support the amendment to the Air and Noise ECA o complete the Lake Timiskaming Assimilative Capacity Study for the discharge of the effluent from the expanded refinery to support the amendment to the ISW ECA o expand the groundwater monitoring network in the vicinity of the proposed TSF o prepare a Closure Plan amendment and provide the necessary additional financial assurance to reflect the additional rehabilitation activities associated with the 5 kt/a expansion o continue with regular consultation and engagement with stakeholders and Indigenous communities • Continuous pilot plant: it is recommended to complete a pilot plant testwork program to inform the full-scale plant design • Site Works: it is recommended that the following be performed to inform the detailed engineering phase: o geotechnical and structural site investigation o 3D laser scan: perform a scan of the existing facility to further inform aspects of detailed design such as piping, layout, and platework and reduce conflicts with existing equipment during installation • Sodium management: given the cost of off-site disposal, further evaluation of technologies applicable to sodium management is recommended. Alternative technologies may include: o electrodialysis and salt splitting o ammonia-based solvent extraction, resulting in the production of a by-product, such as ammonium sulphate

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2 Introduction

2.1 Terms of Reference & Purpose of this Report

This report was prepared by Ausenco for First Cobalt to summarise the results of a feasibility study of the First Cobalt Refinery Project.

The subject of this report relates to the expansion of First Cobalt’s existing cobalt refinery to produce 5 kt/a of cobalt, corresponding to a feed throughput of 55 t/d nameplate or 50 t/d average.

2.2 Units & Currency

All units of measurement in this report are metric and all currencies are expressed in United States dollars (US$ or USD) unless otherwise stated. All tonnes are expressed as dry tonnes unless stated otherwise.

2.3 Property Location

The refinery is located at approximately 47.40640° north and 79.62225° west in Lorrain Township near Cobalt, Ontario, as shown in Figure 2-1.

Figure 2-1. Refinery Location Map

Source: Ministry of Northern Development and Mines (2020)

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2.4 Property Description

The refinery road is located approximately 1.5 km east of the town of North Cobalt along Highway 567, which is locally referred to as “Silver Centre Road”. The refinery road travels south from Highway 567 for about 1 km before arriving at the main gate of the refinery. For most of its length, the refinery road travels the eastern limit of property owned by CCRL. An aerial view of the refinery is depicted in Figure 2-2.

The site includes a building complex and three ponds for tailings and water treatment. The refinery building contains three separate circuits for treating feed materials, including pressure oxidation, solvent extraction and a Merrill-Crowe circuit to recover precious metals. The refinery also contains a control room, laboratories, a maintenance shop, a warehouse, administrative offices and changerooms.

Figure 2-2. Aerial View of the Refinery

Source: Story Environmental (2019).

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2.5 Block Map

The block map shown in Figure 2-3 is an excerpt from the Land Registry Office (LRO) online service (Teranet) showing the property identification numbers (PINs) registered in the area around the refinery.

In Ontario, all private property ownership records are registered with the government. The land registration system contains official records of land and property in Ontario, including title, deed and other mortgage and land documents. The registration of documents is handled by the LRO. Only authorised individuals may register official records with the LRO. The area around the refinery and Temiskaming Shores is handled by the Timiskaming LRO.

First Cobalt retained SEI to review land records for CCRL which is a wholly-owned subsidiary of First Cobalt.

Every piece of land owned in Ontario is assigned a PIN and the title is easily searched by its PIN. The PIN format is 12345-6789 where the first five digits correspond to a block plan and the last four digits are the ID on the block plan.

In Figure 2-3, the red box has been added to delineate the core of land owned by CCRL that is the focus of this feasibility study.

Figure 2-3. LRO Block Map – PINs around the Refinery

Source: Story Environmental (2020).

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The large land parcel in the south (i.e., PIN 61390-0213) is where the refinery currently sits. The land to the north was subdivided into numerous PINs prior to ownership by CCRL. Previous refinery owners purchased this land for potential future expansion. Ownership of this land transferred to CCRL when First Cobalt purchased the refinery.

2.6 Property Identification Numbers

SEI prepared Table 2-1 (overleaf) at the request of First Cobalt after reviewing documentation at the Timiskaming LRO.

Easement of surface rights (SR(E) on Table 2-1) pertains to easements owned by CCRL for the freshwater pipeline that goes from the refinery to Lake Temiskaming from where fresh process water has been historically drawn.

Figure 2-4 shows a consolidated view of the information in Table 2-1. In the northwest corner of Figure 2-4 there are several isolated PINs owned by CCRL. It is uncertain how ownership of these “stranded” PINs came to be, but title has been verified by SEI.

The inset map shows two tiny slivers of land where the pipeline crosses Highway 567 and an easement has not been registered. First Cobalt is working with SEI to ensure that the missing easements are properly registered.

“SRO-L” in Table 2-1 refers to the leasehold interest at the pumphouse where the water intake for the pipeline extends into Lake Temiskaming.

While First Cobalt has all the land it needs for the operating scenario contemplated in this study, it is still strategically acquiring adjacent land to build a larger buffer around the facility. The City of Temiskaming Shores has been helpful in this matter.

2.7 Accessibility

The refinery is located in Lorrain Township near the town of North Cobalt and the city of Temiskaming Shores (Figure 2-5). Temiskaming Shores is an amalgamation of the towns of New Liskeard, Dymond, Haileybury and North Cobalt. Geographically, the refinery is closest to the town of North Cobalt.

The area is accessed via paved highways. The primary route to the refinery from North Bay is described below and shown in Figure 2-6.

• TransCanada Highway 11 North from North Bay • Highway 11B, which links the town of Cobalt and TransCanada Highway 11 • King Street, which is the continuation of Highway 11B from Cobalt to the community of North Cobalt • Highway 567, a secondary highway starting in North Cobalt and heading south along the Ottawa River. Highway 567 is locally designated as Silver Centre Road. • the refinery road branches southward to the refinery from Silver Centre Road

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Table 2-1. Table of CCRL PINs

PIN Ownership Owner Description PCL 24578 SEC SST; PT N1/2 LT 1 CON 12 LORRAIN SRO PT 1 54R4053; S/T PT 1 54R4137 AS IN LT284968; T/W PT 9, 12 & 13 54R4169 AS IN LT293293; T/W PT 6,7 54R4169 AS 61390-0213 SRO Cobalt Camp Refinery Ltd. IN LT293294; T/W PT 14 54R1469 AS IN LT293295; T/W PT 5 54R4169 AS IN LT293296; T/W PT 1 TO 4 54R4169 AS IN LT313631; DISTRICT OF TIMISKAMING Claim No. T174. Multiple SR PINS 61358-0154, 61358-0139, 61358-0155, 61358-0140, 61358-0156, 61358-0141, 61358-0157, 61358-0142, 61358-0002, 61358-0004, 61358-0006, Multiple SR PINs SRO Cobalt Camp Refinery Ltd. 61358-0008, 61358-0010, 61358-0012, 61358-0014, 61358-0016, 61358-0017, 61358-0018, 61358-0019, 61358-0020, 61358-0021, 61358-0022, 61358-0023, and 61358-0024 (see Teranet Express LRO #54; Cobalt Search, 10 October 2019. Individual PINs not obtained) Claim No. T11517. Multiple SR PINS: 61358-0003, 61358-0005, 61358-0007, 61358-0009, 61358-0011, 61358-0013, 61358-0015, 61358-0145, 61358-0161, 61358-0144, 61358-6160, Multiple SR PINs SRO Cobalt Camp Refinery Ltd. 61358-0143, 61358-0159, 61358-0184, and 61358-0158 (see Teranet Express LRO #54; Cobalt Search, 10 October 2019. Individual PINs not obtained) PCL 4280 SEC SST; LT 1 PL M147NB Bucke; LT 2 PL M147NB Bucke; LT 3 PL M147NB Bucke; LT 4 PL M147NB Bucke; LT 5 PL M147NB Bucke; LT 6 PL M147NB Bucke; LT 7 PL M147NB Bucke; LT 8 PL M147NB Bucke; LT 9 PL M147NB Bucke; LT 10 PL M147NB Bucke; LT 11 PL M147NB Bucke; LT 12 PL M147NB Bucke; LT 13 PL M147NB Bucke; LT 14 PL M147NB Bucke; LT 15 PL M147NB Bucke; LT 16 PL M147NB Bucke; LT 17 PL M147NB Bucke; LT 18 PL M147NB Bucke; LT 19 PL M147NB Bucke; LT 20PL M147NB Bucke; LT 21 61358-0001 SRO Cobalt Camp Refinery Ltd. PL M147NB Bucke; LT 22 PL M147NB Bucke; LT 23 PL M147NB Bucke; LT 24 PL M147NB Bucke; LT 25 PL M147NB Bucke; LT 26 PL M147NB Bucke; LT 27 PL M147NB Bucke; LT 28 PL M147NB Bucke; LT 29 PL M147NB Bucke; LT 30 PL M147NB Bucke; LT 31 PL M147NB Bucke; LT 32 PL M147NB Bucke; LT 33PL M147NB Bucke; LT 34 PL M147NB Bucke; LT 35 PL M147NB Bucke; LT 36 PL M147NB Bucke; LT 37 PL M147NB Bucke; LT 38 PL M147NB Bucke SRO; S/T LT114999,LT194261, LT295528; Temiskaming Shores; District of Timiskaming 61358-0131 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Lane PL M147NB Bucke SRO Abutting LT 2054 TO 2081PL M147NB; Temiskaming Shores ; District of Timiskaming 61358-0132 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Lane PL M147NB Bucke SRO Abutting LT 1767 TO 1794PL M147NB; Temiskaming Shores ; District of Timiskaming 61358-0133 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Lane PL M147NB Bucke SRO Abutting LT 1478 TO 1513PL M147NB; Temiskaming Shores ; District of Timiskaming 61358-0134 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Lane PL M147NB Bucke SRO Abutting LT 1201 TO 1236PL M147NB S of Mill Creek; Temiskaming Shores ; District of Timiskaming 61358-0135 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Lane PL M147NB Bucke SRO Abutting LT 2016 TO 2053PL M147NB; Temiskaming Shores ; District of Timiskaming 61358-0136 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Lane PL M147NB Bucke SRO Abutting LT 1729 TO 1766PL M147NB; Temiskaming Shores ; District of Timiskaming 61358-0137 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Lane PL M147NB Bucke SRO Abutting LT 1440 TO 1477PL M147NB; Temiskaming Shores ; District of Timiskaming 61358-0138 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Lane PL M147NB Bucke SRO Abutting LT 1163 TO 1200PL M147NB; Temiskaming Shores ; District of Timiskaming 61358-0146 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; FITZPATRICK Av PL M147NB Bucke SRO S of Mill Creek BTN Second St & Third St; Temiskaming Shores ; District of Timiskaming 61358-0147 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; First St PL M147NB Bucke SRO BTN Mill Creek & Finlan Av; Temiskaming Shores ; District of Timiskaming 61358-0148 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Second St PL M147NB Bucke SRO BTN Mill Creek & Finlan Av; Temiskaming Shores ; District of Timiskaming 61358-0149 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Third St PL M147NB Bucke SRO BTN Mill Creek & Finlan Av; Temiskaming Shores ; District of Timiskaming 61358-0150 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Finlan Av PL M147NB Bucke SRO BTN W Limit of Fourth St & W Limit of Larch Lane; Temiskaming Shores ; District of Timiskaming 61358-0151 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; First St PL M147NB Bucke SRO BTN Finlan Av & Jones Av; Temiskaming Shores ; District of Timiskaming 61358-0152 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Second St PL M147NB Bucke SRO BTN Finlan Av & Jones Av; Temiskaming Shores ; District of Timiskaming 61358-0153 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Third St PL M147NB Bucke SRO BTN Finlan Av & Jones Av; Temiskaming Shores ; District of Timiskaming 61358-0198 SRO Cobalt Camp Refinery Ltd. PCL 23005 Sec SST; Fitzpatrick Av PL M147NB Bucke SRO Abutting LT 2243& LT 2244 PL M147NB; Temiskaming Shores; District of Timiskaming 61357-0142 SRO-L Cobalt Camp Refinery Ltd. PCL 5773 Sec LTIM; Location CL9308 Bucke being pt of the Bed of Lake Timiskaming, in front of Broken LT 15 CON 1, PT 1 54R4809; Temiskaming Shores; District of Timiskaming Water Line Easement - Parts 1-4 SR(E) Cobalt Camp Refinery Ltd. Easement No.LT313631. See PIN 61390-0219 and Plan 54R-4169 (Parts 1-4). Water Line Easement - Part 5 SR(E) Cobalt Camp Refinery Ltd. Easement No.LT293296. See PIN 61390-0079 and Plan 54R-4169 (Part 5). Source: SEI (2020). Notes: SRO = surface rights only; SRO-L = surface rights only - leasehold interest; SR(E) = easement surface rights.

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Figure 2-4. Consolidated CCRL Property Position

Source: SEI (2020).

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Figure 2-5. Regional Location Map

Source: Ministry of Northern Development and Mines (2020).

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Figure 2-6. Annotated Local Accessibility Map

Source: Ministry of Northern Development and Mines (2020).

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2.8 Climate

Ville Marie, Québec, on the east side of Lake Temiskaming, is the closest centre considered representative of the area for which Environment Canada (2017) has climatic records (1981 to 2010).

The region experiences a typical continental-style climate, with cold winters and warm summers. Climate data from the nearest weather station (Ville-Marie) indicate that the daily average temperature ranges from -15°C in January to 18.3°C in July (Environment Canada, 2010). The coldest months are December to March, during which the temperature is often below -20°C and can fall below -30°C. During summer, temperatures can exceed 30°C. Snow accumulation begins in November and generally remains until the spring thaw in mid-March to April, with the average monthly snowfall peaking at 40 cm in January and a yearly average of 181 cm (Environment Canada, 2010). Ville-Marie has an average of 84 cm of precipitation per year.

Mining, milling and refining operations in the region operate year-round.

2.9 Local Resources

The City of Temiskaming Shores (population of 9,920 in 2016), located approximately 11 km north of the refinery road, offers most of the supplies and services that would be required to operate the refinery. In 2004, the city amalgamated the towns of New Liskeard, Haileybury, North Cobalt and Dymond. The town of North Cobalt, 5 km to the east-southeast, has a population of 1,118 (2016) and offers basic services.

The largest city in Northern Ontario is Sudbury (population of 164,926 in 2017), located approximately 200 km by road southwest of the refinery. Sudbury’s economy has been dominated by mining and related industries for most of the 20th century. The city has developed into a world- class mining centre, and is the main hub for the retail, economic, health and education sectors in Northern Ontario. As a result, considerable equipment, supplies and services for mining development are available.

The historical mining context of the region ensures sufficient labour is available for the refinery.

The refinery property is transected by a 230 kV Hydro One transmission line and power to the refinery is supplied by a 115 kV line.

The local watershed is dominated by Lake Temiskaming and the Montreal River, which is a large freshwater lake and river system. Lake Temiskaming is located approximately 2 km north of the refinery building and was the source for freshwater via pipeline to the refinery.

2.10 Infrastructure

In addition to the road access described above, the Ontario Northland railway services the town of Cobalt, linking North Bay with the rest of north-eastern Ontario, as shown in Figure 2-7.

Ontario Northland’s rail line passes approximately 2 km west-northwest of the refinery road.

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2.11 Physiography

The local topography includes the nearby Lake Temiskaming and the Montreal River, which are both within the Ottawa River watershed. The topography within the property boundaries of the refinery is generally flat.

General physiography is typical of the Precambrian Shield in north-eastern Ontario, with rocky, rolling bedrock hills with locally steep ledges and cliffs, separated by valleys filled with clay, glacial material, swamps and streams. Given the presence of the Clay Belt, some farms are present nearby.

In this boreal region, coniferous and mixed-wood forests dominate. The main conifer species are black and white spruce, jack pine, balsam fir, tamarack and eastern white cedar. The predominant deciduous (hardwood) species are poplar and white birch. Swampy low-lying areas contain abundant tag alders.

Figure 2-7. Ontario Northland Freight & Service Map

Source: Ontario Northland (2019).

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2.12 History

2.12.1 1994 to 1999: The Cobatec Era

In the 1980s, the location was the site of the Hellens-Eplett underground mine, which featured a traditional silver and cobalt mill that was common in the historic Cobalt Mining Camp. The property and mill were purchased by Cobatec Ltd. in the 1990s and construction of the refinery took place in 1994 and 1995 at a cost of over C$30 million. The integrated mining, milling and refining operation would process ore from the mine in the mill to produce concentrate and then produce a refined cobalt and silver product from the concentrate in the refinery. Initial start-up was in 1996. The refinery was built with a nominal 12 t/d feed rate.

A few months after start-up, however, the mine ran out of ore and ceased production. The ore concentrating equipment was removed leaving only the refining equipment in place. The former ore concentrating building was repurposed as a warehouse in which feeds for the refinery were stored.

During this phase of operation, the refinery made a cobalt-carbonate product from four feedstocks over different periods. Each feedstock required extensive modification to the refining flowsheet resulting in changes to the configuration of the refinery to accommodate the varying characteristics of each feedstock.

Cobatec began experiencing financial difficulties in 1998 and eventually shut down the refinery on January 2, 1999. The refinery was only operational for approximately one of the three years between start-up and shutdown.

2.12.2 1999 to 2003: The Canmine Era

Canmine Resources Corporation closed the purchase of the Cobatec Refinery on September 30, 1999 and took possession on October 12, 1999. At that time, Canmine was developing the Werner Lake cobalt deposit near Kenora, Ontario and planned to process the cobalt concentrate at the refinery. In addition, Canmine intended to use the refinery to process cobalt-silver-bearing residue owned by Agnico-Eagle Mines Limited. This residue material was located approximately 3 km from the refinery. Testwork on the Agnico-Eagle material commenced with an aim to restarting the refinery with this feed, while Canmine continued to develop the Werner Lake deposit. The focus of the restart was on redesigning the refinery to treat 13,100 tonnes of Agnico-Eagle cobalt- silver-nickel-bearing tailings for 36 to 42 months.

Canmine began commissioning the refinery in December 2001 and achieved substantial completion in April 2002. The autoclave was also commissioned in April 2002.

After four years of engineering and a reported C$12 million investment in upgrading and reconfiguring the refinery, Canmine announced a voluntary capital restructuring in June 2002, ultimately seeking CCAA creditor protection in July 2002. Canmine declared bankruptcy in February 2003 and the refinery devolved to the bondholders.

Outside of processing test batches during commissioning, the refinery never operated on a continual basis for any appreciable length of time during this period.

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2.12.3 2003 to 2012: Yukon Era #1

The bondholders, Yukon Refinery AG, Zürich, established a company known as 36569 Yukon Inc. (Yukon) and renamed the facility the “Yukon Refinery”. Yukon never operated the Refinery and kept it on care and maintenance while pursuing the sale of the asset.

2.12.4 2012 to 2015: The United Commodities Era

In 2012 United Commodities structured a deal with Yukon to acquire the Refinery in June 2012. United Commodities’ business plan was to process batches of low-cost, high-grade feeds through the refinery in campaigns. It was understood that each campaign would require an adjustment to the flowsheet and configuration of the refinery.

Beginning in 2012, MOUs for processing batches of feed material were reportedly signed with several companies, including Mistango River Resources and Gowest Gold.

United Commodities reportedly raised C$30 million, of which a significant portion went into upgrading the Merrill-Crowe system to produce Ni, Co, Ag and Au from concentrates that were otherwise difficult to process. Enough material was processed during this time to produce a few bars of silver.

Towards the end of its tenure, United Commodities turned its attention to reclaiming tailings from the autoclave pond, believing they contained economic quantities of platinum group metals. United Commodities went bankrupt in April 2015 and ownership of the refinery reverted to Yukon.

2.12.5 2015 to 2017: Yukon Era #2

Similar to Yukon Era #1, Yukon did not attempt to operate the refinery, and kept it on care and maintenance while pursuing the sale of the asset.

2.12.6 2017 to Present: The First Cobalt Era

On June 1, 2017, First Cobalt entered into a 50-50 joint venture with Australian-listed Cobalt One Limited to acquire the refinery. Much like First Cobalt, Cobalt One had significant mineral property holdings in the Cobalt Camp and was actively exploring in the area. Later that same month, First Cobalt proposed a merger with Cobalt One; the merger was completed on December 1, 2018. The successful merger consolidated 100% ownership of the refinery under Cobalt Camp Refinery Ltd., a wholly-owned subsidiary of First Cobalt.

First Cobalt has kept the refinery on care and maintenance since that time, and has realised two important aspects of the refinery:

1. Past economic failures of the refinery occurred because previous operators did not have a long-term supply of consistent feed. 2. At a 12 t/d nominal feed rate, the refinery is too small under most operating scenarios to be economically profitable.

First Cobalt began investigating alternate feed sources and settled on cobalt hydroxide, an abundant by-product of copper production in the DRC, as a potential feedstock. SGS Canada Inc.

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(SGS) was contracted to run testwork on a sample of cobalt hydroxide using only the primary unit operations that exist in the refinery.

In April 2019, First Cobalt announced that SGS had successfully produced a high-purity cobalt sulphate from the sample of cobalt hydroxide. This was closely followed by the completion of a Conceptual Study by Ausenco in June 2019 that examined three potential restart scenarios, based on resolving major bottlenecks within the process. Each bottleneck, once addressed, would achieve a step-change in throughput to a point where the physical size of the buildings and property itself become the limiting factor.

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3 Metallurgical Testwork

3.1 Introduction

Metallurgical testwork has been conducted to inform the process design for the refinery. The objective of the process is to produce a battery-grade cobalt sulphate product from a cobalt hydroxide feed.

Impurities in the feed sample are removed after leaching through various unit operations to produce a battery-grade cobalt sulphate. Iron, aluminium and partial copper removal are achieved in neutralisation, while manganese, copper and zinc can be extracted in ISX. Cobalt is separated from nickel and magnesium in CoSX prior to cobalt sulphate crystallisation.

The objectives of the testwork program were as follows:

• bench-scale testing to determine the operating conditions and targets for process unit operations, and the unit operations required • production of a battery-grade cobalt sulphate product • production of samples for subsequent environmental testing

Metallurgical testing was completed at SGS in two separate programs on two hydroxide samples. The initial program (No. 17070-01) began in late 2018 and was completed in May 2019. The second program (No. 17070-03) began in September 2019 and was completed in April 2020. The testwork programs were managed by First Cobalt, with input from Ausenco.

The purpose of the 17070-01 campaign was to conduct preliminary scoping testing on a cobalt hydroxide feedstock that included leaching, neutralisation, and single-batch solvent extraction contacts to produce a final cobalt sulphate crystal. While the cobalt hydroxide material was not representative of the expected feedstock to be processed in the refinery, it was used to confirm the proposed processing flowsheet and determine baseline parameters for future test programs.

The 17070-03 campaign was conducted on a feedstock that is representative of the expected refinery feed to provide data for the feasibility study. The scope included extensive bench-scale testing to determine design conditions and operating targets of the various unit operations.

The main elements of the bench testing programs included:

• Re-leach and neutralisation: leach cobalt from the hydroxide feed, followed by precipitation of iron, aluminium and chromium impurities from solution • Impurity solvent extraction (ISX): remove copper, zinc, manganese and calcium impurities from the cobalt solution • Cobalt solvent extraction (CoSX): extract and concentrate cobalt from solution, thereby separating cobalt from nickel and magnesium impurities • Ion exchange: potentially required to remove copper, zinc, manganese and nickel, depending on the upstream process performance

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• Cobalt sulphate crystallisation: to produce crystalline cobalt sulphate and confirm that the product meets battery grade specifications • Solids-liquids separation testing: to provide design information for equipment sizing

3.2 Sample Composition

The composition of the cobalt hydroxide samples used in the test programs is shown in Table 3-1.

Table 3-1. Cobalt Hydroxide Sample Analysis

Co Cu Fe Mn Mg Si Zn Ni Al Cr Program (%) (%) (%) (%) (%) (%) (g/t) (g/t) (g/t) (g/t)

17070-01 23.2 1.61 2.39 3.27 3.45 1.05 1920 3870 6390 52 17070-03 29.2 0.46 0.12 4.85 5.67 0.77 403 9410 1200 <100

The 17070-01 sample had a lower cobalt content (23.2% w/w) than the 17070-03 sample (29.2% w/w), as well as higher levels of copper, iron, silica, zinc and aluminium impurities. The source of the 17070-01 was from an operation in the DRC. The grade of cobalt hydroxide feeding the process is expected to average 30%, and therefore the 17070-03 sample is better representative of the expected refinery feed. The sample had higher concentrations of manganese, magnesium, and nickel impurities than the 17070-01 sample. The source of the 17070-03 sample was the Mutanda operation in the DRC and a mass of 570 kg (gross) was supplied.

The 17070-01 sample was supplied in dry form (0% w/w moisture). The 17070-03 sample was supplied as a representative refinery feed sample and had a moisture content of 66% w/w. The sample was homogeneous and contained small lumps that were very easily broken up by hand and by mixing when pulped. Visual inspection of the sample indicated that some oxidation may have occurred during shipping, as the blue/green solids were covered by a brown surface layer, as shown in Figure 3-1.

Figure 3-1. Cobalt Hydroxide Feed for 17070-03

Source: SGS, (2020).

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A particle size distribution (PSD) analysis was performed on the 17070-03 hydroxide feed using a laser particle size analyser. The PSD of the cobalt hydroxide feed was found to be relatively fine, indicating that the larger lumps broke up in water during the PSD test. The results are shown in Table 3-2.

Table 3-2. PSD of the 17070-03 Cobalt Hydroxide Feed Sample

P100 P80 P50 P10 Size (um) 120 52 30 5

The 17070-03 hydroxide feed sample was also submitted for semi-quantitative mineral identification by X-ray diffraction (XRD) in November 2019 to identify the crystalline compounds present in the sample. XRD interpretations do not reflect the presence of non-crystalline and/or amorphous compounds. The results are summarised in Table 3-3.

Table 3-3. 17070-03 Cobalt Hydroxide XRD Results – Relative Proportion of Crystalline Mineral Assemblages

Major Moderate Minor Trace (>30% w/w) (10-30% w/w) (2-10% w/w) (<2%) Serpentine Cobalt sulphate Jamborite Amorphous minerals Cobalt manganese oxide Ramsbeckite* Cobalt oxide Cobalt sulphite hydrate Cobalt sulphate hydroxide *tentative identification due to low concentrations, diffraction line overlap, or poor crystallinity.

The various crystalline mineral assemblages in the feed are summarised in Table 3-4.

Table 3-4. 17070-03 Cobalt Hydroxide XRD Results – Mineral Compositions

Mineral Composition

Cobalt manganese oxide CoMnO3

Cobalt oxide Co3O4

Cobalt sulphate CoSO4

Cobalt sulphide hydroxide Co3(SO4)2(OH)2(H2O)2

Cobalt sulphite hydrate CoSO3.2.5H2O

Jamborite (Ni,Fe,Co)(OH)2(OH,S,H2O)

Ramsbeckite Cu15(SO4)4(OH)22.6H2O

Serpentine Mg3Si2O5(OH)4

The cobalt hydroxide feed is primarily amorphous as expected, and the XRD results demonstrate the complex composition of the hydroxide feed. It is expected that the cobalt contained in the manganese oxide compound may be more difficult to leach completely, while the cobaltic (Co3+) compounds may also have slower leaching kinetics than cobaltous (Co2+) compounds. The serpentine is likely unreacted material from MgO used during the precipitation of the cobalt hydroxide.

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3.3 Program 17070-01

The 17070-01 bench testing program was conducted between late 2018 and May 2019 and included the following main elements:

• re-leach and neutralisation • ISX • CoSX • copper ion exchange and manganese precipitation • cobalt sulphate crystallisation

3.3.1 Re-leach & Neutralisation Tests

A series of cobalt hydroxide re-leach tests were completed to determine the optimum conditions for future testwork. The program targeted the production of a solution containing 10 g/L cobalt. The following tests were included:

• RL1: optimise leach pH: sampled at pH 2.5, 2.0 and 1.5 • RL2: optimise neutralisation pH: sampled at pH 3.5, 4.0, 4.5 and 5.0 • RL3: produce liquor at optimised parameters for solvent extraction tests • RL4: kinetic test at 50°C • RL5: kinetic test at 90°C

The tests were conducted at a temperature of 50°C, with the addition of 96% sulphuric acid to achieve the target pH. Neutralisation was achieved through the addition of a 30% limestone (CaCO3) slurry.

Test RL1 identified that a target pH of 1.5 during leaching resulted in the highest cobalt recovery within the conditions tested. The total leach time was 100 minutes, including an allocated 30- minute stabilisation period after each pH set point was reached. Sulphuric acid addition was 680 kg/t and cobalt dissolution at pH 1.5 was 98.3%.

Leaching also extracts other elements such as iron, copper, aluminium, manganese, magnesium, zinc and nickel from the feed. These elements need to be separated from the cobalt prior to the production of battery-grade cobalt sulphate. The first stage of impurity removal is neutralisation, during which the pH of the solution is raised by the addition of limestone to precipitate iron, aluminium, chromium and some copper. The optimum pH for neutralisation was evaluated in Test RL2.

Test RL2 included a 45-minute leach at pH 1.5, followed by stepwise pH adjustment with limestone. A 30-minute period was allowed after each pH set point was reached before sampling was conducted. The total leach/neutralisation test was completed in 3 hours and results are summarised in Figure 3-2. The sulphuric acid addition was 594 kg/t and limestone addition was 156 kg/t.

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The results indicated that operation at pH 5 would provide the highest impurity removal, with minimal cobalt losses. Iron and aluminium were reduced to <0.2 mg/L, copper was reduced to <40 mg/L, while overall cobalt extraction to solution after neutralisation was 95.0%.

Test RL3 was conducted with the same parameters as RL2 and was used to produce bulk solution for solvent extraction testwork. The test was completed in 3.5 hours, and the resulting solution composition and element recoveries are summarised in

Table 3-5.

The sulphuric acid addition was 773 kg/t and limestone addition was 289 kg/t. The iron, aluminium and chromium solution concentrations were reduced to sufficiently low levels to meet the required impurity limits for downstream battery-grade cobalt sulphate production, while cobalt recovery was maintained above 97%.

Figure 3-2. Neutralisation Profile for 17070-01 RL2 Test

Table 3-5. 17070-01 RL3 Product Solution & Recovery after Neutralisation

Co Cu Fe Mn Mg Zn Ni Al Cr Solution composition (mg/L) 9,340 110 <0.2 571 1,510 62 156 1.3 1.9 Recovery after neutralisation (%) 97.2 15.4 0.0 41.4 86.1 83.2 97.4 0.4 71.4

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RL4 at and RL5 were conducted to confirm the impact of temperature on leach kinetic rates at 50°C and 90°C, respectively. Leaching was conducted over 60 minutes at a pH of 1.5. Test results (see Table 3-6) indicated that the higher temperature did not result in improved leach kinetics. Both tests achieved maximum cobalt liquor concentrations within 10 minutes of leaching.

Table 3-6. Leach Recovery Kinetic Test Results

Test Co Cu Fe Mn Mg Zn Ni Al Cr Acid (%) (%) (%) (%) (%) (%) (%) (%) (%) (kg/t) RL4 – 50°C 99.0 99.7 81.8 38.5 99.4 99.9 99.7 96.7 85.3 856 RL5 – 90°C 98.3 99.4 70.2 43.1 99.3 99.7 99.5 95.6 92.7 851

The key parameters identified for leaching and neutralisation included:

• target cobalt solution concentration: 10 g/l • cobalt recovery after neutralisation: 97% • leach retention time: 1 hour • neutralisation retention time: 2 hours • leach and neutralisation temperature: 50°C • leach sulphuric acid addition: to pH 1.5, average addition 750 kg/t • neutralisation with limestone: to pH 5, average addition 222 kg/t

The extractions for key elements were provided in

Table 3-5. The tests demonstrated high cobalt extractions and sufficient removal of iron, aluminium and chromium impurities during neutralisation.

3.3.2 ISX

ISX uses an organic extractant (D2EHPA) in an organic carrier fluid or diluent (Exxsol D80) to selectively extract impurities from the cobalt-rich solution. A single-pass simulation of the extraction process was completed as part of the 17070-01 program to prepare the solution for further processing.

Solution produced from re-leach test RL3 was used for the solvent extraction tests. Based on the solution composition, the organic solution used in the tests was calculated to require 5% by volume D2EHPA extractant in 95% by volume Exxsol D80 diluent. Sodium hydroxide (NaOH) at a concentration of 20% was used to achieve the required pH targets.

A series of five single-pass tests was completed to evaluate the optimal extraction pH to be used for the bulk extraction test. Liquor from RL3 was used with a PLS grade of 9.3 g/L cobalt. Tests were conducted at 30°C. The liquor was contacted with the organic solvent at a ratio of 1:1 aqueous to organic. The targeted pH extraction points of the aqueous phase after separation were pH 3.0, 3.5, 4.0, 4.5 and 5.0. The results are shown in Figure 3-3.

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The results indicated that maximum manganese removal of 82% was achieved at an extraction pH of 5. Zinc extraction was >98% over the complete pH profile, and while not measured, it is expected that copper extraction would be similar. Calcium extraction decreased as the extraction pH was increased.

Approximately 25% of the cobalt was loaded onto the organic at pH 5. This cobalt would be removed from the organic during subsequent scrubbing stages and returned to the extraction stage. However, testing of the scrubbing stage was not in the scope of the 17070-01 program.

In a commercial facility, solvent extraction would be conducted in multiple extraction stages and with a controlled pH profile to maximise the extraction of impurities and minimise cobalt extraction. For the purposes of the 17070-01 program, an extraction pH of 5 was selected to prepare the bulk solution for further processing to cobalt sulphate. The bulk RL3 solution was processed at 30°C, at a ratio of 1:1 aqueous solution to organic solvent and at a target pH of 5. The results are summarised in Table 3-7.

The treated solution was used as the feed solution in the CoSX testing.

Figure 3-3. 17070-01 ISX pH Profile

Table 3-7. ISX Extraction Bulk Solution Treatment – 17070-01 DE2 Test

Unit Co Mn Mg Ca Zn Ni RL3 Solution (feed) mg/L 9,340 571 1,510 445 62 156 Product Solution mg/L 7,820 127 1,400 351 <0.7 161 Extraction % 16 78 7 21 99 0

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3.3.3 CoSX

CoSX uses an organic extractant (Cyanex 272) in an organic carrier fluid/diluent (Exxsol D80) to selectively extract cobalt from the cobalt-rich solution, while leaving impurities (nickel and magnesium) behind. A single-pass simulation of the extraction, scrubbing and stripping process was completed as part of the 17070-01 program to prepare solution for further processing to cobalt sulphate product.

Solution produced from the ISX bulk test was used for the CoSX tests. Based on the solution composition, the organic solution used in the tests was calculated to require 15% by volume Cyanex 272 extractant in 85% by volume Exxsol D80 diluent. Sodium hydroxide (NaOH) at a concentration of 200 g/L was used to achieve the required pH targets.

3.3.3.1 CoSX Extraction

A series of three single-pass tests was completed at 55°C to evaluate the optimal extraction pH to be used for the bulk extraction test. Liquor from ISX with a PLS grade of 7.8 g/L cobalt was used. The liquor was contacted with the organic solvent at a ratio of 1:1 aqueous to organic. The targeted pH extraction points tested were pH 4.5, 5.0 and 5.5. The results are summarised in Figure 3-4. The pH points were measured on the aqueous phase after separation.

Figure 3-4. 17070-01 CoSX pH Profile

The results indicate that a maximum cobalt extraction (96%) was achieved at pH 5.5, although manganese and magnesium impurity extraction also increased as the target extraction pH was increased. Nickel extraction remained below 4% across the pH range.

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For the purposes of the 17070-01 program, an extraction pH of 5.5 was elected to process the bulk solution from ISX extraction. The bulk solution was processed at 55°C and at a ratio of 1:1 aqueous solution to organic solvent. The results are summarised in Table 3-8.

Table 3-8. CoSX Extraction Bulk Solution Treatment – 17070-01 CE2 Test

Unit Co Mn Mg Ca Zn Ni DE2 Solution (feed) mg/L 7,820 127 1,400 351 <0.7 161 Raffinate Solution mg/L 322 2 704 327 <0.7 161 Loaded Organic mg/L 7,227 124 682 71 <8 <6 Extraction % 96 98 49 18 ~90 ~5

The loaded organic from the bulk extraction test was then processed in CoSX scrubbing tests.

In a commercial facility, solvent extraction would be achieved with multiple extraction stages and a controlled pH profile to maximise the extraction of cobalt while simultaneously minimising the extraction of impurities such as magnesium. Continuous performance would therefore be better than that achieved in single-pass testing.

3.3.3.2 CoSX Scrubbing

Scrubbing is used in CoSX to remove magnesium that was extracted to the organic phase with minimal removal of cobalt. Scrubbing can be achieved by pH adjustment of the solution, and by displacing elements with lower solubility in the organic phase through the addition of cobalt sulphate to the scrubbing liquor. The scrubbing tests conducted under the 17070-01 program included the use of a scrub liquor containing 25 g/L CoSO4. The scrub liquor was synthetically prepared from reagent (>99% purity).

A sighter test (CB1) was conducted to confirm the scrubbing test parameters, prior to bulk processing of the loaded organic (CB2). Loaded organic scrubbing was completed at ambient temperature and an aqueous-to-organic ratio of 1:8. The target pH was 4. Sulphuric acid at a concentration of 50 g/L was used for pH adjustment in the tests. The results of the bulk scrubbing test are summarised in Table 3-9.

Table 3-9. CoSX Scrubbing Bulk Treatment – 17070-01 CB2 Test Unit Co Mn Mg Ca Zn Ni Loaded Organic mg/L 7,227 124 682 71 <8 <6 Scrubbed Organic mg/L 3,520 69 0 55 6 6 Removal % 51 44 100 22 26 2

The bulk scrubbing test indicated effective scrubbing of magnesium and partial scrubbing of manganese, calcium and zinc. The scrubbed organic solution was then processed in the CoSX stripping test.

3.3.3.3 CoSX Stripping

A single CoSX stripping test was conducted to prepare a solution for cobalt sulphate crystallisation. The scrubbed organic was stripped at ambient temperature with de-ionised water

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acidified to pH 2.8 with sulphuric acid. Further pH adjustment was achieved by the addition of 96% sulphuric acid to a pH of 1.8 to ensure complete stripping of cobalt, visually confirmed by little to no colour remaining in the organic phase. The analysis of the loaded strip liquor solution produced from the stripping test is summarised in Table 3-10.

Table 3-10. CoSX Stripping Bulk Treatment – 17070-01 CS1 Test

Unit Co Mn Mg Ca Zn Ni Cu Loaded Strip Liquor mg/L 6,250 129 3.8 3.1 <0.8 <1 23.9 Ratio of Co/element - 1 48 1,667 2,016 7,813 6,250 262

Stripping removed 100% of the cobalt with a resulting solution concentration of 6.25 g/L. The major impurities in the solution included copper and manganese, and the concentration of these impurities had to be reduced to produce battery-grade cobalt sulphate.

3.3.4 Strip Solution Purification

Copper was removed from the cobalt strip solution through ion exchange, whereby the solution is contacted with a solid resin which selectively extracts copper from the solution. A jar test was conducted using a XUS43578 resin. Resin addition was at 500% excess based on the feed solution copper concentration. The resin and solution were mixed for 24 hours at 55°C. The copper concentration was reduced from 23.9 mg/L to <0.2 mg/L. No change was observed in the manganese concentration. The cobalt extraction to the resin was 4.8%. The amount of cobalt extraction in a full-scale circuit would be minimised by optimising the extraction pH and by selectively stripping cobalt from the loaded resin to recover loaded cobalt.

Manganese removal was tested through addition of Caro’s acid (H2SO5), which results in the oxidation and precipitation of manganese. The solution from the copper ion exchange test was used as the feed to the manganese removal tests. The pH of the solution was increased from 1 to 2.5 by the addition of laboratory grade cobalt hydroxide. This allowed pH adjustment to be achieved with minimal contamination of the solution with other impurities, but also increased the cobalt concentration in solution.

Two sequential stages of oxidation/precipitation with Caro's acid at 50°C were completed. In the first test (MnR1), five 100% stoichiometric doses of Caro's acid were added to the pH adjusted feed solution. The manganese was reduced from 136 mg/L to 3.69 mg/L. In the second test (MnR2), the solution pH was again adjusted to 2.5 by the addition of cobalt hydroxide. A total of 600% stoichiometric Caro’s acid was added in five doses. No additional manganese removal was achieved.

The strip purification tests reduced the copper and manganese impurity levels sufficiently to allow the solution to be used for cobalt sulphate crystal production. The chemical analysis of the purified solution is summarised in Table 3-11.

Table 3-11. Strip Purification Processed Liquor – 17070-01 Test

Unit Co Mn Mg Ca Zn Ni Cu Purified Liquor mg/L 15,300 4.3 5.4 7.3 <0.7 6.4 <0.6 Ratio of Co/element - 1 3,533 2,823 2,096 21,857 2,391 25,500

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3.3.5 Cobalt Sulphate Crystallisation

The product solution from Caro’s acid treatment was agitated and heated to 100°C. The solution was maintained at 100°C for approximately 6 hours to evaporate a target of 80% of the water and concentrate cobalt in the solution. The solution was then cooled to a target temperature of 50°C and then allowed to naturally cool further for 1 hour. The crystalline solids produced were then filtered. The filtered solids were not washed and were air dried after filtration. The composition of the produced cobalt sulphate is shown in Table 3-12.

Table 3-12. Cobalt Sulphate Composition

Unit Co Mn Mg Ca Zn Ni Cu Cobalt Sulphate g/t 20.8% 42 49 59 <7 80 11 Ratio of Co/element - 1 4,930 4,270 3,525 29,710 2,600 18,570

The single-pass liquor testing demonstrated that cobalt sulphate could be produced from cobalt hydroxide and provided preliminary parameters for future testwork.

3.4 Program 17070-03

The 17070-03 bench testing program was conducted from September 2019 to April 2020 at SGS Lakefield. A cobalt hydroxide sample representative of the expected feed to be used in the refinery was sourced for the test program. A head sample was and submitted for analysis.

The aim of the 17070-03 program was to provide data for the feasibility study. The scope included extensive bench testing to determine process conditions and operating targets of the various unit operations.

The 17070-03 bench testing program included the following main elements:

• re-leach and neutralisation • ISX • CoSX • preparation of material for solid/liquid separation testing • preparation of material for environmental/tailings testing

The bench-scale testing scope included confirmatory leach and neutralisation testing, based on the conditions identified during the 17070-01 program, as well as optimisation of the process conditions if required. Both ISX and CoSX were investigated, including organic blend/strength, pH and phase ratio. Isotherm and scrubbing testing were included to help estimate the number of stages required in a continuous operation.

3.4.1 Re-leach & Neutralisation Tests

Seven tests were conducted to confirm the re-leach and neutralisation parameters identified in the 17070-01 program, and to provide solution for further processing and testing:

• RL1: confirmatory test and production of solution for solvent extraction tests

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• RL2: leach test only to confirm the extent of extraction from the new sample • RL3: pH profile test to re-establish the pH curve with the new feed sample • RL4: production of solids for acid rock drainage (ARD) testing • RL5: production of solids for Atterberg environmental testing • RL6 and RL7: bulk tests to produce material for solid/liquid separation and subsequent environmental and geotechnical testing

Typical test parameters included a leach temperature of 50°C, with the addition of 96% sulphuric acid to achieve the target leach pH. Neutralisation was achieved through the addition of a 30% limestone (CaCO3) slurry. The cobalt tenor was increased from the 10 g/L target in 17070-01 to 15 g/L in the 17070-03 program to optimise the size of downstream equipment in the commercial facility.

Test RL1 was conducted to confirm the leach and neutralisation parameters from 17070-01 testing and to produce solution for solvent extraction testing. The leach was conducted at pH 1.5 and the neutralisation target was a pH of 5. The total test time was 3 hours. The RL1 results are summarised and compared to the 17070-01 program in Table 3-13.

The results from the RL1 test indicated that the cobalt recovery after neutralisation was lower than that achieved during the 17070-01 program. The reason for this could either be due to lower leach extractions (due to cobalt-manganese and cobaltic compounds in the 17070-03 feed) and/or larger cobalt losses during precipitation (due to the higher cobalt solution target of 15 g/L).

Table 3-13. Recovery after Neutralisation for 17070-03 RL1 Test Relative to 17070-01

Co Cu Fe Mn Mg Zn Ni Al Cr 17070-01 RL3 Recovery (%) 97.2 15.4 0.0 41.4 86.1 83.2 97.4 0.4 71.4 17070-03 RL1 Recovery (%) 93.5 7.4 0.4 15.6 97.5 85.8 92.3 0.4 7.5

Test RL2 was conducted to confirm the leach extractions for the 17070-03 cobalt hydroxide. The test was conducted over 36 minutes at a temperature of 50°C and a target pH of 1.5. Sulphuric acid addition was 799 kg/t and cobalt dissolution at pH 1.5 was 96%, which was slightly lower than the 98% achieved during the 17070-01 program. Manganese leach extraction was 4%, indicating that some cobalt may still be locked in unleached cobalt-manganese minerals.

The optimum pH for neutralisation was re-evaluated in test RL3, which included a 30-minute leach at pH 1.5, followed by stepwise pH adjustment with limestone. A 30-minute period was allowed after each pH set point was reached before sampling was conducted. The total leach/neutralisation test was completed in 3 hours and targeted a cobalt tenor of 10 g/L solution to match the 17070-01 pH profile test. Sulphuric acid addition was 594 kg/t and limestone addition was 156 kg/t. Test results are summarised in Figure 3-5, which indicates that a neutralisation target pH of 5 would allow removal of iron and aluminium to <1 mg/L. Copper was reduced to <40 mg/L, which was similar to the results achieved in 17070-01.

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Figure 3-5. Neutralisation Profile for 17070-03 RL3 Test

The overall deportment of cobalt to solution at pH 5 was 93%, which was similar to the 95% achieved in the 17070-01 test.

Test RL4 was completed with the same parameters at RL1 and was conducted to generate solids for acid rock drainage (ARD) tests on the precipitated solids.

Test RL5 was conducted at the same conditions as RL1 and RL4. The purpose of RL5 was to produce solids residue for environmental moisture and Atterberg testing.

Test RL6 and RL7 were bulk tests to generate slurry for solid/liquid separation testing and subsequent geotechnical testing. The bulk tests were run at the same conditions as RL1.

The results of the re-leach and neutralisation tests are summarised in Table 3-14. Overall, the results are similar to the previous hydroxide sample used in 17070-01.

Based on the 17070-03 program, the design conditions selected to be included in the process design criteria were as follows:

• target cobalt solution concentration: 15 g/L • leach retention time: 1 hour, including time to reach pH • leach temperature: 50°C

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• sulphuric acid addition: pH 1.5 • cobalt dissolution after leaching: 96% • average sulphuric acid addition: 748 kg/t feed • neutralisation retention time: 2 hours, including time to reach pH • neutralisation to pH 5 with limestone • cobalt dissolution after neutralisation: 93% • limestone addition: 161 kg/t feed

Table 3-14. 17070-03 Re-leach & Neutralisation Test Extraction Extents & Reagent Addition

Element Extraction (%) Test RL1 RL2 RL3 RL4 RL5 RL6 RL7 Nickel 92.3 98.4 93.9 92.6 89.9 87.4 87.5 Cobalt 93.5 96.0 92.8 91.7 90.2 88.7 87.6 Copper 7.4 97.1 17.7 9.3 4.9 2.5 4.0 Zinc 85.8 99.0 91.5 81.8 80.2 69.5 74.4 Magnesium 97.5 98.8 97.7 96.6 97.6 97.9 97.6 Manganese 15.6 4.3 9.9 9.3 10.1 12.4 10.8 Acid addition (kg/t) 715 799 943 787 673 684 633 Limestone addition (kg/t) 256 N/A 461 307 208 161 157

3.4.2 ISX Tests

The 17070-03 ISX Program used a D2EHPA organic extractant in an Exxsol D80 organic carrier fluid to selectively extract impurities from the cobalt solution. A series of tests were completed to better define the extraction, scrubbing and stripping processes and provide solvent extraction design parameters, as well as to prepare solution for further processing to cobalt sulphate product. Test results were used in METSIM™ modelling and in modelling performed by the solvent reagent vendor, Solvay.

Solution produced from re-leach Test RL1 containing 13.9 g/L cobalt was used for the solvent extraction tests.

3.4.2.1 ISX Extraction

The ISX extraction testing included five tests to provide information for the process design and to produce solutions for further testing:

• DE1: develop and confirm the extraction pH profile (pH 3.0, 3.5, 3.75, 4.0 and 4.5) • DE2: evaluate different D2EHPA extractant concentrations (10% and 15% D2EHPA) • DE3: develop the loading isotherm • DE4: production of ISX raffinate for CoSX testing • DE5: production of loaded organic for scrubbing testing

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A series of five single-pass contacts was completed to evaluate the optimal extraction pH. The tests were conducted at 40°C using a 5% D2EHPA extractant concentration. The pH profile is presented in Figure 3-6.

Figure 3-6. 17070-03 ISX Extraction pH Profile

The results indicated that maximum manganese extraction of 66% was achieved at an extraction pH of 5. Zinc extraction was 97% over the complete pH profile, and while copper extraction was not measured, it would be expected to be extracted to some extent. Calcium extraction decreased as the extraction pH was increased. The optimum extraction pH of 3.75 was selected to achieve impurity extraction with limited cobalt extraction. Approximately 8% of the cobalt was loaded onto the organic at pH 3.75. Test DE2 was conducted to determine the D2EHPA extractant concentration at which the extraction of impurities was optimised. Single-pass tests were completed at pH 3.75 with D2EHPA concentrations at 10% and 15% and results were compared to the CE1 test at 5% D2EHPA. The comparison is presented in Figure 3-7.

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Figure 3-7. 17070-03 ISX Extraction D2EHPA Concentration Profile

Manganese and calcium extraction were maximised at a D2EHPA concentration of 15% and this extractant concertation was used for the remaining extraction testing. Test DE3 was completed to develop the loading isotherm for ISX extraction. A series of seven single-pass tests was completed at various aqueous-to-organic ratios, ranging from 10:1 to 1:10. The results are presented in Figure 3-8. Copper extraction was measured in this test and follows the manganese curve. Figure 3-8. 17070-03 ISX Extraction Phase Ratio Profile

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The information was used to develop McCabe-Thiele isotherms. The McCabe-Thiele isotherms for manganese and calcium are shown in Figure 3-9. The operating line (advance phase ratio) at 1.75 aqueous-to-organic ratio indicates that calcium should be expected to load within two stages, while manganese would require two to three stages of extraction to reduce the impurity level in the ISX raffinate sufficiently. The results suggest that three to four stages would be required in the extraction phase of ISX.

Figure 3-9. 17070-03 ISX McCabe-Thiele Diagrams for Manganese and Calcium Extraction

Manganese 800

700

600

500

400

300 Organic (mg/L)Organic 200

100

0 0 50 100 150 200 250 300 350 Raffinate (mg/L)

Calcium 2500

2000

1500

1000 Organic (mg/L)Organic

500

0 0 100 200 300 400 500 600 Raffinate (mg/L)

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Based on the test results, the design conditions selected were as follows: • extraction pH was 3.75 • organic extractant concentration was 15% D2EHPA • aqueous-to-organic (A:O) ratio is 1.75:1

Further optimisation of the extraction process can be achieved by continuous testing including multiple extraction stages with an optimised pH profile across extraction stages. In addition, a batch isotherm cannot simulate crowding effects experienced in a continuous full-scale operation.

Two additional bulk ISX tests were completed to provide raffinate for CoSX extraction testing and loaded organic for ISX scrubbing testing. These tests were completed at an aqueous-to-organic ratio of 3:1. The bulk raffinate production results are summarised in Table 3-15.

Table 3-15. ISX Bulk Raffinate Production – 17070-03 DE4 Test

Unit Co Mn Mg Ca Zn Ni Cu Feed RL1 Liquor mg/L 13,900 325 2,950 568 16.8 449 18.9 Raffinate mg/L 12,500 108 2,590 93 <0.7 408 4.4 Extraction % 4.8 66.4 5.1 84.4 >96.4 2.6 69.8

3.4.2.2 ISX Scrubbing

The ISX scrubbing testing included two tests to provide information for the process design and to produce solutions for further testing:

• DB1: develop the scrubbing pH profile (pH 1.5, 2.5, 2.75, 3.0 and 3.25) • DB2: truncated scrubbing isotherm of ISX loaded organic to estimate the staging requirements and to produce scrubbed organic for stripping testing

A series of five single-pass tests was completed to evaluate the optimal extraction pH. The tests were conducted at ambient temperature and used a 5 g/L sulphuric acid solution as scrub liquor. Adjustment of the pH was achieved by adding 100 g/L sulphuric acid as required. Loaded organic from extraction test DE4 was used for the pH profile test and the results are presented in Figure 3-10.

The results show that cobalt can be effectively scrubbed from the organic. Scrubbing of calcium and manganese from the organic increases as the pH is reduced. Based on the results, a scrubbing pH of 2.75 was selected for the bulk test to produce scrubbed organic for stripping testing.

Test DB2 was conducted on combined loaded organic from extraction tests DE4 and DE5. A series of five single-pass tests was completed at various aqueous-to-organic ratios, ranging from 5:1 to 1:10. Results are presented in Figure 3-11.

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Figure 3-10. 17070-03 ISX Scrubbing pH Profile

Figure 3-11. 17070-03 ISX Scrubbing Phase Ratio Profile

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The results again showed that cobalt can be effectively scrubbed from the loaded organic, with relatively low amounts of calcium scrubbed. Manganese scrubbing is approximately 10% at an aqueous-to-organic ratio of 1. It is estimated that two to three stages of scrubbing in ISX would be sufficient, with the correct pH profile maintained and the circuit operated such that high concentrations of manganese, calcium and zinc are maintained in the organic phase to reduce capacity for cobalt to load.

3.4.2.3 ISX Stripping

Two stripping tests were completed to confirm the ISX stripping characteristics. Stripping solutions of 150 g/L and 200 g/L sulphuric acid were tested. Aqueous-to-organic ratios of 1 were used in stripping to account for the high calcium concentration on the scrubbed organic and mitigate potential gypsum precipitation. The results are summarised in Table 3-16.

Table 3-16. ISX Stripping Results – 17070-03 DS1 & DS2 Tests

Co Mn Mg Ca Zn Cu Residual (%) (%) (%) (%) (%) (%) (H2SO4)

DS1 – 200 g/L H2SO4 99 99 99 97 90 98 181 g/L

DS2 – 150 g/L H2SO4 93 93 92 90 82 100 17 g/L

Test DS1 strip aqueous was hazy and required filtering to remove a small amount of solids, while the organic remained clear. This indicated that some gypsum precipitation had occurred during the test, due to calcium saturation being reached in the strip liquor. The repeated stripping test DS2 was completed without any evidence of precipitation and good phase separation was achieved. Calcium saturation will be managed in the full-scale operation by adjusting aqueous- to-organic ratios to allow the stripping operation to be performed below calcium saturation limits.

3.4.3 CoSX Tests

CoSX uses an organic extractant (Cyanex 272) to selectively extract cobalt from the cobalt-rich solution, thereby separating the cobalt from the remaining impurities (nickel and magnesium). Only the extraction process was evaluated as part of the 17070-03 program. The initial tests were completed using raffinate from the ISX DE5 test, with the ISX DE4 solution retained for future testing.

The CoSX extraction testing included three tests to provide information for the process design:

• CE1: develop the extraction pH profile [pH 4.0, 4.5, 5.0, 5.5 and 6.0] • CE2: evaluate different Cyanex 272 extractant concentrations (15%, 20%, 25% and 30%) • CE3: develop the loading isotherm

CE1 included a series of five single-pass tests that was completed to determine the extraction pH profile. The tests were conducted at 40°C using a 15% Cyanex 272 extractant concentration. The pH profile is presented in Figure 3-12.

The test results indicated that magnesium and nickel loading would be minimised at a pH of 4.5. While cobalt extraction in a single contact was 57%, it is noted that full-scale facilities utilise

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multiple extraction stages in series that are operated with a specific pH profile to maximise cobalt recovery.

For the CE2 test, the ISX raffinate used as the feed was synthetically spiked with cobalt and magnesium sulphate to more closely approximate the expected solution concentrations in the CoSX aqueous feed. The test was conducted to determine the optimum Cyanex 272 extractant concentration for the system. A series of four single-pass tests was conducted at 40°C and an extraction pH of 4.5. Results are presented in Figure 3-13.

Figure 3-12. 17070-03 CoSX Extraction pH Profile

Figure 3-13. 17070-03 CoSX Extraction Cyanex 272 Concentration Profile

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Manganese (0.1 mg/L), calcium (1.7 mg/L) and copper (2.6 mg/L) are only trace impurities in the feed, but are included in the results for completeness. As expected, the amount of cobalt loaded on the Cyanex 272 increases with the higher organic strengths.

Based on these results, the extraction isotherm was developed in test CE3, using 20% Cyanex 272 and an extraction pH of 4.5. A series of seven single-pass tests was completed at various aqueous-to-organic ratios, ranging from 10:1 to 1:10. Results are presented in Figure 3-14.

Figure 3-14. 17070-03 CoSX Extraction Phase Ratio Profile

The information was used to develop a McCabe-Thiele isotherm for cobalt, which is shown in Figure 3-15. The operating line (advance phase ratio) at 0.5 aqueous-to-organic ratio suggests that three extraction stages would be required in the CoSX circuit. It is expected that the phase ratio can be brought closer to 1:1 by increasing the concentration of Cyanex 272 from 20% to 30%, but the stage requirements will likely remain the same.

Based on the test results, the design conditions initially selected (and later superseded by Solvay modelling) were as follows:

• extraction pH 4.5 • organic extractant concentration of 20% Cyanex 272 • aqueous-to-organic (A:O) ratio of 1:1

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Figure 3-15. 17070-03 CoSX McCabe-Thiele Diagrams for Cobalt Extraction

Cobalt 9000

8000

7000

6000

5000

4000 Organic (mg/L)Organic 3000

2000

1000

0 0 2000 4000 6000 8000 10000 12000 14000 16000 Raffinate (mg/L)

3.4.4 Hydroxide Solids Liquids Separation Tests

Settling and filtration testing on discharge slurry from the 17070-03 RL6 residue. The solid-liquid separation test program included:

• flocculant selection • static settling • dynamic thickening • underflow rheology • pressure filtration • filtration washing

The residue particle size and dried solids SG were determined at the start of the solid-liquid separation testing. Results are summarised in Table 3-17.

Table 3-17. 17070-03 RL6 Residue Characterisation

P80 SG Pulp pH RL6 Residue 35 µm 2.74 5.3

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3.4.4.1 Thickening Testing

Flocculant scoping tests were performed using a range of anionic, non-ionic and cationic flocculants. The scoping results indicated that the sample responded well to BASF Magnafloc 333, which is a very high molecular weight non-ionic flocculant.

Static settling tests were performed at 50°C in 2 L graduated cylinders fitted with a rotating “picket-style” rake. The static settling test results were used as preliminary starting conditions for subsequent dynamic (continuous) thickening tests. The results of the best preliminary test were as follows:

• flocculant selected: Magnafloc 333 • flocculant dose: 98 g/t • optimum feed dilution to thickener feed: 0.5% w/w solids • underflow density: 7.2% w/w solids • thickener specific unit area: 4.3 m2/(t/d) • supernatant clarity: clear • supernatant total suspended solids (TSS): 30 mg/L

Dynamic thickening testing followed the static thickening testing and was conducted at a diluted feed density of 0.5% w/w solids and a thickener unit area of 3.0 m2/(t/d). Flocculant doses of 50, 75, 100 and 150 g/t were tested. The 150 g/t dose provided the overflow with the lowest TSS of 27 mg/L and this flocculant dose was used for subsequent testing over a range of five thickener unit areas. The results are summarised in Table 3-18.

Table 3-18. Dynamic Thickening Testing Results – 17070-03 RL6 Residue

Unit Area Solids Loading Net Rise Rate Underflow Solids Overflow TSS (m2/(t/d)) (t/m2/h) (m3/m2/h) (% w/w) (mg/L) 3.5 0.012 52.6 6.2 21 3.0 0.014 61.4 5.0 27 2.7 0.015 68.2 5.0 27 2.4 0.017 76.7 4.2 23 2.1 0.20 87.7 3.7 20

3.4.4.2 Thickening Underflow Rheology Testing

The underflow samples from each of the dynamic thickening tests were submitted for testing to define the sample rheology. Results are summarised in Table 3-19. Headings in the table refer to ASG and SG. ASG is the “actual specific gravity” of dry solids, calculated from the measured pulp density, while SG is the dried solids “specific gravity”, as measured with a pycnometer. The deviation of the ASG versus SG of the dry material defines the pulp inter-particle interaction.

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Table 3-19. Dynamic Thickening Underflow Rheology Characterisation

Solids U/F Density Sample ASG SG ASG/SG (% w/w) (g/L) Test 1 2.27 2.74 0.83 9.4 1,113 Test 2 2.06 2.74 0.75 8.2 1,101 Test 3 1.95 2.74 0.71 6.9 1,092 Test 4 1.72 2.74 0.63 6.0 1,082 Test 5 1.53 2.74 0.56 5.1 1,074

RL6 residue thickener underflow exhibited significant inter-particle interactions as the ASG/SG ratios were near 0.7, indicating that the specific gravity of the dried solids was lower than the specific gravity in the pulp phase.

Additional rheology tests were performed at 50°C pulp temperature using a rheometer fitted with a cone-bottomed spindle and cup configuration. The results determined that the critical solids density of RL6 residue underflow sample was ~7.7% w/w solids, which exhibited a yield stress of 10 Pa under unsheared flow condition and 5 Pa under sheared conditions, measured after a three- minute period of constant shearing. A thixotropic response was exhibited by the sample at test densities at or above 6.9% w/w solids. Thixotropic response is a “flow-friendly” behaviour, whereby the resistance to flow decreases during constant shearing. A plug flow response was exhibited by the sample during the unsheared sample measurement at or above 8.2% w/w solids. The results are summarised in Figure 3-16.

Figure 3-16. Thickener Underflow Solids Content vs. Yield Stress – 17070-03 RL6 Residue

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3.4.4.3 Thickening Underflow Filtration Testing

Underflow vacuum and pressure filtration tests were conducted on the RL6 residue underflow sample at 50°C at a filter feed density of 7.9% w/w solids, based on the results of thickening and rheology tests. Vacuum filtration was conducted at 0.68 bar vacuum level. Pressure filtration was conducted at 6.9 bar and 9.9 bar pressure levels.

Cloth scoping tests were conducted using various filter cloths. Testori P4408 TC polypropylene cloth was selected for the vacuum filtration test series. Micronics 861 was selected for the pressure filtration test series.

Vacuum filtration test cake thicknesses ranged from 5 to 20 mm, and the resulting solids output ranged from 8 to 31 kg/m2·h. The discharge cake residual moisture content ranged from 75.4% to 82.7% w/w moisture. The filter cakes produced were mostly wet or sticky.

Pressure filtration test cake thicknesses ranged from 10 to 30 mm. The resulting solids output ranged from 17 to 35 kg/m2·h. (Note: this includes filtration, form and dry times only. Filter loading, membrane squeeze, cake discharge, and cloth washing times are not included). The discharge cake residual moisture content ranged from 71.8% to 75.5% w/w. The filter cakes produced were all dry on the surface. The high moisture contents of the filter cakes are from chemically bound water.

Vacuum and pressure filtration test results are summarised in Table 3-20.

Table 3-20. Vacuum & Pressure Filtration Results

Pressure Form Dry Cake Cake Filtrate Level Time Time Thickness Throughput Moisture TSS Type (bar) (s) (s) (mm) (dry kg/m2.h) (% w/w) (mg/L)

Vacuum -0.68 450 45 20 30 82.7 45 Vacuum -0.68 295 59 15 31 81.6 33 Vacuum -0.68 280 168 13 24 78.9 30 Vacuum -0.68 280 280 11 19 78.2 29 Vacuum -0.68 285 855 11 10 76.0 29 Vacuum -0.68 75 375 5 11 75.4 41 Vacuum -0.68 495 1,485 16 8 76.3 36 Pressure 6.9 188 156 10 33 73.3 42 Pressure 6.9 425 158 15 29 74.7 38 Pressure 6.9 711 341 23 22 75.5 62 Pressure 6.9 1,034 706 29 17 75.3 47 Pressure 9.9 186 143 10 35 71.8 54 Pressure 9.9 392 234 15 28 73.6 54 Pressure 9.9 652 420 22 22 74.4 152 Pressure 9.9 1,054 627 30 19 73.3 152

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Filtration results were worse than expected, which was most likely caused by the re-leach residue slurry only containing 1.6% solids by weight. There was very little metals precipitation to add mass to the residue. Most of the solids were gypsum from neutralising sulphuric acid. The cobalt hydroxide feed had a minimal iron concentration of only 1,200 g/t. Normally iron would form the bulk of the precipitate, along with gypsum, and the residue could typically be thickened to an underflow density of 35% to 45% solids. Furthermore, in continuous operation, a seed recycle can be used to increase the precipitate particle size distribution and thereby improve the slurry settling and filtration characteristics.

A cake-washing test was conducted on RL6 residue underflow on a pressure filter at 50°C. The test was conducted at 9.9 bar on a newly formed 19 mm thick cake. De-ionised water was used as wash solution at ambient temperature. Incremental washes were added in equal volumes to the formed cake and filtered until most of the wash had passed the surface of the cake. Each wash filtrate was collected individually and submitted for assay. The targeted soluble species for tracking wash efficiency was cobalt and nickel.

Cobalt and nickel recoveries (versus the total solute in the feed) of 97.7% and 97.4%, respectively, were achieved at a 2.0 v/v wash ratio (by volume, based on cake void volume). Further washing increased the cobalt and nickel recoveries to approximately 100%, after 3.0 v/v wash ratio. Test results are summarised in Table 3-21.

Table 3-21. Pressure Filtration Cake Washing Results

Wash Ratio Filtrate Co Filtrate Ni Co Recovery Ni Recovery Sample (v/v) (mg/L) (mg/L) (%) (%) PLS 0 12,900 328 54.7 54.7 Wash 1 1.0 10,400 262 84.5 84.2 Wash 2 2.0 4,880 124 97.7 97.4 Wash 3 3.0 1,180 39 100.8 101.4 Wash 4 4.0 488 15 102.1 103.0 Wash 5 5.0 319 9.7 102.9 104.0 Wash 6 6.0 209 6.9 103.5 104.7 Wash 7 7.0 145 4.6 103.9 103.9

3.5 Solvent Extraction Modelling

Results from the 17070-03 bench testing program and process METSIM model were provided to Solvay for evaluation of the solvent extraction processes on a continuous basis. Solvay supplies organic extractant reagents such as Cyanex 272 and has software capable of modelling the solvent extraction process over multiple stages. Modelling was conducted to evaluate a PLS stream containing 13.1 g/L cobalt as per the test program, as well as a high concentration case for a PLS containing 20 g/L cobalt. In this case, impurity concentrations were adjusted to match the cobalt upgrade ratio from 13.1 g/L to 20 g/L.

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3.5.1 ISX

3.5.1.1 Modelling of PLS with 13.1 g/L Cobalt

Only the ISX extraction circuit was modelled. The modelled extraction performance is summarised in Table 3-22. The recommended configuration of the ISX circuit based on the Solvay modelling was:

• organic extractant concentration: D2EHPA at 15% by volume • configuration: 3 extraction stages; 2 scrubbing stages; 2 stripping stages • total number of stages: 7 • extraction advance O/A: 0.57 • extraction pH profile: E1 = 2.4; E2 = 2.6; E3 = 2.7

Table 3-22. ISX Extraction (13.1 g/L Cobalt PLS) – Solvay Modelling

Unit Co Mn Mg Ca Zn Ni Cu ISX PLS mg/L 13,100 375 3610 584 14 59 29 ISX Raffinate mg/L 12,702 0 3364 0 0 58 0 Extraction % 3.0 99.9 6.8 100 100 1.0 98.8

3.5.1.2 Modelling of PLS with 20 g/L Cobalt

The complete ISX circuit was modelled for a PLS containing 20 g/L cobalt. This case was evaluated to provide optimisation of the solvent extraction circuit size.

The outputs of the modelling are summarised in Table 3-23. The stripping circuit parameters were maintained to mitigate the risk of gypsum precipitation and minimise the free acid in the loaded strip liquor to reduce neutralisation reagent consumption in effluent treatment.

Table 3-23. ISX (20 g/L Cobalt PLS) – Solvay Modelling

Unit Co Mn Mg Ca Zn Ni Cu ISX PLS mg/L 20,000 573 5,511 584 21 90 44 ISX Raffinate mg/L 19,432 0 5161 0 0 89 0.1 Extraction % 2.8 100 6.4 100 100 1.2 99.8 Loaded Organic mg/L 997 1,002 614 1,024 34 2 65 Scrubbed Organic mg/L 95 991 164 1,020 27 0 62 Scrubbed % 90.5 1.2 73.3 0.4 19.5 100 4.7 Stripped Organic mg/L 0 45 0 246 19 0 0 Stripped % 100 95.5 100 75.9 31.3 N/A 99.7

Manganese, zinc and calcium on the stripped organic will come to an equilibrium over time. The strip liquor is expected to contain 2 g/L sulphuric acid and <400 mg/L calcium, which is below the calcium saturation concentration and mitigates the risk of potential gypsum precipitation.

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The recommended configuration of the ISX circuit for a 20 g/L cobalt PLS based on the Solvay modelling was:

• organic extractant concentration: D2EHPA at 20% by volume • configuration: 3 extraction stages; 2 scrubbing stages; 2 stripping stages • total number of stages: 7 • extraction advance O/A: 0.57 • extraction pH profile: E1 = 2.3; E2 = 2.7; E3 = 2.8 • scrubbing advance O/A: 10 • scrubbing pH profile: Sc1 = 2.4; Sc2 = 1.8 • stripping pH profile: S1 = 1.7; S2 = 1.5

3.5.2 CoSX

3.5.2.1 Modelling of PLS to ISX with 13.1 g/L Cobalt

The raffinate produced in the Solvay modelling of the ISX circuit was used as the PLS in the CoSX modelling exercise. There is some dilution of the cobalt concentration due to the addition of sodium hydroxide for pH control in ISX. The outputs of the modelling are summarised in Table 3-24.

Table 3-24. CoSX (13.9 g/L Cobalt ISX PLS) – Solvay Modelling

Unit Co Mg Ni CoSX PLS mg/L 12,702 3,364 58 CoSX Raffinate mg/L 48 3,015 57 Extraction % 99.6 10.3 2.3 Loaded Organic mg/L 12,652 374 - Scrubbed Organic mg/L 8,539 1.5 - Scrubbed % 32.5 99.6 - Loaded Strip Liquor mg/L 10,2446 18 - Stripped % 100 100 -

The modelling indicates that the loaded strip liquor that is suitable to produce a battery-grade cobalt sulphate through crystallisation. The recommended configuration of the CoSX circuit for a 13.9 g/L cobalt PLS based on the Solvay modelling was:

• organic extractant concentration: Cyanex 272 at 30% by volume • configuration: 3 extraction stages; 6 scrubbing stages; 1 or 2 stripping stages • total number of stages: 10 or 11 • extraction advance O/A: 1.0 • extraction pH profile: E1 = 4.4; E2 = 4.5; E3 = 5.1

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• scrubbing advance O/A: 10 • scrubbing pH profile: Sc1 = 4.1 to Sc6 = 3.6 • stripping advance O/A: 12

3.5.2.2 Modelling of PLS with 20 g/L Cobalt

The raffinate produced in the Solvay modelling of the upstream ISX circuit was used as the PLS in the CoSX modelling exercise. The outputs of the modelling are summarised in Table 3-25.

Table 3-25. CoSX (20 g/L Cobalt ISX PLS) – Solvay Modelling

Unit Co Mg Ni CoSX PLS mg/L 18,870 5,126 85 CoSX Raffinate mg/L 70 4,606 83 Extraction % 99.6 10.1 2.5 Loaded Organic mg/L 17,000 512 1.9 Scrubbed Organic mg/L 10,473 1.1 0 Scrubbed % 38.4 99.8 100 Loaded Strip Liquor mg/L 120,270 11 - Stripped % 100 100 -

The modelling indicates that the loaded strip liquor is suitable to produce a battery-grade cobalt sulphate through crystallisation. The recommended configuration of the CoSX circuit for a 20 g/L cobalt PLS based on the Solvay modelling was:

• organic extractant concentration: Cyanex 272 at 40% by volume • configuration: 3 extraction stages; 6 scrubbing stages; 1 or 2 stripping stages • total number of stages: 10 or 11 • extraction advance O/A: 1.0 • extraction pH profile: E1 = 4.3; E2 = 4.4; E3 = 5.1 • scrubbing advance O/A: 10 • scrubbing pH profile: Sc1 = 4.0 to Sc6 = 3.5 • stripping advance O/A: 12

3.6 Environmental Testing

3.6.1 ARD Testing

The hydroxide leach residue sample from test RL4 in the 17070-03 program was submitted for ARD (acid rock drainage) testing. The ABA test conducted by SGS Lakefield indicated that the residue had a neutralisation potential (NP) of 50.7 and an acid potential (AP) of 0.94, resulting in a NP/AP ratio of 54.1. The residue has almost no sulphide and appreciable neutralisation potential (NP). No ARD issues are expected with the residue.

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3.6.2 Geotechnical Testing

The hydroxide leach residue sample from test RL5 in the 17070-03 program was submitted for the following environmental and geotechnical testing by SGS:

• geotechnical moisture content (ASTM D2216) • Atterberg limits (ASTM D4318)

The average geotechnical moisture content results are summarised in Table 3-26.

Table 3-26. Geotechnical Moisture Content (ASTM D2216) for 17070-03 RL5 Residue

Test Unit 1 2 3 Water Content, as Mass of Water/Mass of Solids % 247.3 238.6 240.3 Unified Soil Classification Group Symbol (Visual) - CL CL CL

The Atterberg limits of the 17070-03 RL5 residue were found to be:

• liquid limit (LL) of 279 • plastic limit (PL) of 118 • plasticity index (PI) of 161

3.6.3 Synthetic Tailings Testing

The hydroxide leach residues from test RL6 and RL7 in the 17070-03 program were combined and mixed with gypsum to create a synthetic sample representative of the tailings produced from the neutralisation and effluent treatment processes.

The scope of the geotechnical testing includes the following:

• solids S.G. • geotechnical moisture content (ASTM D2216)* • Atterberg limits (ASTM D 698)* • standard Proctor • particle size distribution* • settling density test* • drained settling density test* • hydraulic conductivity (falling head Knight Piésold method KPL-TP-2B)* • air drying test* • rowe cell hydraulic consolidation (7 stages), with hydraulic conductivity test in row per stage*

*Results of these tests were not available at the time of publication of this report.

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The solid S.G. of the tailings material was found to be 2.51 t/m3. The results of the standard proctor test are summarized in Figure 3-17.

Figure 3-17. Standard Proctor Test Results for Synthetic Tailings Sample

Key results of the test are as follows:

• maximum wet density: 1.715 g/cm3 • maximum dry density: 1.285 g/cm3 • optimum geotechnical moisture content: 33.5 % • optimum process moisture content: 25.1% w/w

3.6.4 Sodium Toxicity Testwork

SEI provided guidance as to the effluent discharge concentration that should not result in acute toxicity in the effluent discharged from the refinery. This concentration was established based on published LC50 (i.e., the concentration of a chemical that will kill 50% of the sample population being tested) data for Daphnia magna. The published LC50s are summarised in Table 3-27.

Based on published toxicity data, it was estimated that that the concentration of sodium in the effluent should be less than, or approximately, 1,600 mg/L. In February 2020, LC50 dilution toxicity testing was undertaken utilising a synthetic effluent solution to confirm the design value for sodium. The testwork was performed by Aquatox Testing and Consulting Inc. in Puslinch, ON.

The synthetic solution was prepared utilising expected (i.e., modelled) concentrations of magnesium, calcium, and sodium in the effluent. The composition of the tested synthetic solution is illustrated in Table 3-28.

The results of the LC50 testing for Daphnia magna and rainbow trout are summarised in Table 3-29.

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Table 3-27. Applicable LC50s for the First Cobalt Refinery

Acute Toxicity of Metal to Metal Unit Daphnia Magna (LC50) Sodium mg/L 1600 Magnesium mg/L 140 Calcium mg/L 870 Chromium mg/L 0.13 Manganese mg/L 9.30 Iron mg/L 2.30 Cobalt mg/L 0.710 Nickel mg/L 0.65 Copper mg/L 0.01 Zinc mg/L 0.72 Germanium mg/L 24 Source: Yamamuro et al. (2014).

Table 3-28. Synthetic Solution Composition for Toxicity Testing

Element Co Mn Mg Ca Cd Cr Fe Na Cl Cu Assay (mg/L) <0.3 <0.04 19.4 370 <0.1 <0.2 <0.4 6760 7 <0.1

Table 3-29. LC50 Results for Daphnia Magna

Solution Strength Unit 100% 50% 33% 25% Sodium Concentration mg/L 6,760 3,380 2,231 1,690 Daphnia Survival Rate (48-hour) - 0% 0% 50%* 90% Rainbow Trout Survival Rate (96-hour) - 0% 100% 100% 100% *Interpolated.

The testing indicated that toxicity to Daphnia magna is the limiting factor, since the rainbow trout withstood higher concentrations of the synthetic effluent than the Daphnia magna. There was 100% mortality in the 50% (i.e., 50% synthetic effluent) LC50 test and 0% mortality in the 25% (i.e., 25% synthetic effluent) LC50 test; therefore, the LC50 concentration of synthetic effluent was determined, by interpolation, to be 33%. The corresponding concentration of sodium in a 33% synthetic effluent is 2,231 mg/L. It is important to note that some of the toxicity, at this LC50 concentration, may also be due to other metals that were added to this synthetic solution (i.e., this toxicity may not be entirely due to the sodium in the synthetic solution). It is also important to consider that in the actual effluent other metals could contribute to toxicity, which may result in the LC50 for the actual effluent being lower than 33%.

Based on the results, the design value for sodium concentration in effluent discharged from the refinery was selected to be 2,000 mg/L.

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3.6.5 Effluent Treatment Testwork

Effluent treatment testwork was conducted by SEI in February 2020. The purpose of the testwork was to inform the design of the effluent treatment system, which uses a lime slurry to raise the solution pH and precipitate soluble metals.

A synthetic solution was prepared utilising expected concentrations of magnesium, sulphur, and sodium in the effluent derived from the METSIM™ model. The composition of the tested synthetic solution is illustrated in Table 3-30.

Table 3-30. Composition of Synthetic Solution for Effluent Treatment Testwork

Element Co Mn Mg Ca Cd Cr Fe Na Cl Cu Assay (mg/L) 67.8 <0.04 64.3 224 < 0.1 0.8 1.4 7520 11 5.3

A series of tests were performed in which the effluent was treated with lime targeting a pH of 9- 12, resulting in final pH values between 7 and 11. The results of the test for the primary elements of concern (i.e., elements of which the untreated effluent concentrations are high relative to their toxicity limit as stated in Table 3-27) are illustrated in Figure 3-18.

Figure 3-18. Effluent Treatment Testwork Results

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The semi-log plot above demonstrates a strong correlation between pH and the log of concentration for both nickel and cobalt. The concentrations of copper and zinc were at or below detection limits above a final pH of 8.

As the LC50 for cobalt is 0.7 mg/L, it was determined that the final pH target for the effluent treatment process must be greater than 10.5. A design value of pH 11 was selected.

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4 Refinery Design

4.1 Introduction

The existing refinery is a hydrometallurgical processing plant that will be upgraded to produce cobalt sulphate from a cobalt hydroxide feed material. The process involves leaching, neutralisation, solvent extraction, crystallisation, and various filtration and dewatering technologies.

The feed material will be a standard cobalt hydroxide feed product at a cobalt grade of 30% w/w. The feed material contains impurities such as iron, copper, manganese, nickel, magnesium, and zinc that must be removed to produce a battery-grade cobalt sulphate. “Battery grade” is defined as a product that meets limitations on impurity concentrations, as specified by the end users.

The effluent produced from the refinery is also subject to limitations on the concentrations of metals and compounds. The limitations are derived from provincial and federal guidelines and regulations.

This chapter describes the plant and process design required to treat cobalt hydroxide and produce battery-grade cobalt sulphate at the refinery.

4.2 Design Basis

4.2.1 Process Design

The process plant design is based on a combination of metallurgical testwork, process modelling, First Cobalt’s specifications, data from other consultants and equipment vendors, applicable regulations, and in-house information. The design considers the expansion of the existing refinery, and therefore the flowsheet has been designed to utilise the existing equipment and plant layout where applicable.

The process design is consistent with other operations, including:

• Long Harbour: impurity solvent extraction followed by cobalt solvent extraction • Bulong Refinery: cobalt solvent extraction with CYANEX 272 followed by sulphide precipitation and impurity solvent extraction with D2EHPA • Terrafame, Finland: crystallisation of high purity cobalt sulphate heptahydrate

CYANEX 272 was also used for cobalt extraction in the previous refinery flowsheet.

The design is based on the composition of the sample tested in the 17070-03 testwork program. Variability in the concentrations of impurities will impact the operating costs associated with the production of a battery-grade cobalt sulphate.

The overall flowsheet is shown in Figure 4-1. The proposed flowsheet is comprised of the following circuits:

• feed preparation and re-pulping of cobalt hydroxide material

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• atmospheric leaching with sulphuric acid • neutralisation with limestone followed by cyclone classification, gypsum removal, thickening, and vacuum filtration • ISX, including extraction raffinate filtration and crud treatment • CoSX, including extraction raffinate and strip liquor filtration, and crud treatment • crystallisation, centrifuging, drying, and product bagging • sodium treatment, which includes evaporation and crystallisation • effluent treatment with lime followed by clarification and filtration prior to discharging into Lake Timiskaming

4.2.2 Refinery Layout

The design objective of the layout for the refinery was to minimise the footprint and new buildings required. This was achieved by re-using existing buildings, and where possible, the existing process equipment. A field investigation was conducted in Q3 2019 to evaluate the condition and characteristics of the existing infrastructure to inform the layout design.

When selecting equipment to be re-used and the location of new equipment, consideration was given to process flow to ensure that pipe runs, electrical cabling, and other direct costs would be minimised. The size of new equipment and tanks was evaluated to ensure it would fit within the existing building envelopes and entryways. The overall refinery layout is shown in Figure 4-2.

Major equipment and infrastructure re-used in the proposed process design are as follows:

• all buildings including the refinery, warehouse, and Merrill-Crowe building (now the leaching area) • freshwater pipeline • power line and substation • ancillary facilities, such as the septic field, laboratory, and offices (provision has been made for refurbishment) • tanks meeting residence time and materials of compatibility requirements • effluent clarifier (now the iron residue thickener), and two existing thickeners

Due to the increase in throughput and feed cobalt content relative to the historical operation, the following new areas are required to support the proposed process:

• solvent extraction building • sodium treatment building • crystalliser building • vacuum filtration building • effluent treatment area • neutralisation area

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Figure 4-1. Overall Process Flowsheet

Source: Ausenco Engineering (2020).

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Figure 4-2. Overall Refinery Layout

Source: Ausenco Engineering (2020).

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To accommodate the revised layout design, equipment and infrastructure (e.g., the existing ball mill, batch autoclave, and feed conveyor) must be removed.

4.3 Plant Design Criteria

The design criteria are derived primarily from the testwork presented in Chapter 3 as performed by SGS and others. In the case of ISX and CoSX, the Solvay modelling was ultimately used to inform the design.

Key process design criteria for the refinery are listed in Table 4-1.

Table 4-1. Key Refinery Process Design Criteria

Parameter Unit Value Dry Throughput, Average t/d 50 Availability % 91.3 Feed Moisture % w/w 66 Feed Cobalt Content % w/w 30 Feed Supply Form - 1-tonne bulk bags Feed Storage Capacity days 5 Target Leach Solution Cobalt Tenor g/L 20 Leach Residence Time h 1 Leach Operating Temperature, Range °C 45-50 Neutralisation Operating pH - 5.0 Neutralisation Residence Time h 6 Cooling Tower Target Temperature °C 30 Iron Residue Filter Cake Moisture %w/w 25 ISX Feed Temperature °C 40 ISX Stages extract / scrub / strip 3 / 2 / 2 ISX Extractant Concentration %v/v 20 ISX Settler Flux m3/h/m2 3.5 CoSX Stages extract / scrub / strip 3 / 6 / 2 CoSX Extractant Concentration %v/v 40 CoSX Settler Flux m3/h/m2 3.5 Target Product Grade, Cobalt % w/w 20.5 Target Cobalt Production t/a 5,000 Target Effluent Treatment pH - 11 Effluent Treatment Residence Time h 1 Effluent Treatment pH for Discharge - 8.5 Effluent Treatment Filter Cake Moisture % w/w 25 Maximum Wastewater Concentration, Sodium mg/L 2,000

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4.4 Feed Handling & Re-Pulping

Cobalt hydroxide feed material will be transported to the refinery by trucks. The feed will be contained in 1-tonne bulk bags, which will be transported within 40-foot shipping containers. The trucks will be unloaded by forklifts into the refinery warehouse, which has capacity to store five days of feed material. The warehouse and feed storage area are depicted in Figure 4-3.

Figure 4-3. Feed & Product Storage Area

Source: Ausenco Engineering (2020).

Bulk bags will be lifted using an overhead crane and broken within a bag breaker, allowing the hydroxide material to flow by gravity to a screw re-pulper. Raffinate from the CoSX circuit is added to the re-pulper to facilitate the pulping of the material. The resulting slurry is then pumped to the leach feed tank at a target density of 20% w/w solids. The bag breaker and re-pulper area is depicted in Figure 4-4.

During start-up, a gas fired heater will be used to heat the CoSX raffinate to 50°C to facilitate the leach reaction.

The feed handing and re-pulping circuit includes the following key equipment:

• overhead crane • bag breaker • screw re-pulper • leach feed tank

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Figure 4-4. Bag Breaker & Re-pulper Area

Source: Ausenco Engineering (2020).

4.5 Atmospheric Leaching

The cobalt hydroxide slurry is pumped from the leach feed tank to the leaching circuit. The leaching circuit consists of three agitated tanks in series. The cobalt hydroxide feed material is leached with sulphuric acid to produce soluble cobalt sulphate, as described in the equation below:

퐶표(푂퐻)2 + 퐻2푆푂4 → 퐶표푆푂4 + 2퐻2푂

During this time, impurities in the feed also enter the aqueous phase and must be removed in downstream processes. The leach solution overflows by gravity through the tanks providing a total retention time of 1 hour. The leaching process takes place at approximately pH 1.5 and 45- 50°C. Potentially acidic vapours evolving from the leach process are removed by a scrubber.

The atmospheric leaching circuit includes the following key equipment:

• leach tanks • leach scrubber

4.6 Neutralisation & Dewatering

The leach discharge slurry reports to the neutralisation circuit, which is comprised of three agitated tanks in series. Limestone is added to raise the pH and precipitate impurities, such as iron. The overall residence time for the tanks was selected to be six hours, allowing a tank to be

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taken offline for maintenance. The resulting slurry is pumped to a dewatering cyclone. The cyclone underflow reports to an underflow pumpbox, where it is split between a seed recycle stream to the neutralisation tanks and the iron residue filter. The cyclone overflow reports to the cooling tower. The target mass split to the underflow is 35% to provide sufficient mass flow for seed recycle.

To minimise scaling in downstream processes, the cyclone overflow is cooled to 30-35°C in a cooling tower. At this temperature, gypsum solubility is reduced, and additional solids precipitate.

Discharge from the cooling tower reports to a high rate thickener, where solids are thickened to a target density of 35% w/w. The underflow is pumped to a horizontal vacuum belt filter, while the overflow is pumped to the solvent extraction feed tank. The neutralisation tanks, gypsum cooling tower, and iron residue thickener are depicted in Figure 4-5.

Figure 4-5. Neutralisation & Dewatering Area

Source: Ausenco Engineering (2020).

Cyclone and thickener underflow report to an agitated stock tank, from where they are pumped to a horizontal vacuum belt filter. The vacuum filter operates with several counter-current washing stages to recover soluble cobalt. The filtrate is captured and returned to the iron residue thickener,

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allowing the cobalt to report to ISX. The filter cake is filtered to a target moisture content of 25% and discharged to a bunker, from where it is reclaimed by front-end loaders and haul trucks and delivered to the TSF.

The neutralisation circuit is comprised of the following key equipment:

• neutralisation tanks • dewatering cyclone • cooling tower • iron reside thickener • iron residue vacuum filter

4.7 ISX

Overflow from the iron residue thickener reports to the ISX circuit. The overflow is collected in the solvent extraction feed tank, where the solution is pumped through a heat exchanger and polishing filter. The heat exchanger raises the temperature of solution to 40°C to prevent gypsum precipitation in subsequent stages and to improve disengagement kinetics in the mixer settlers. The polishing filters remove any remaining solid particulates that would cause additional crud to form and negatively impact solvent extraction performance.

The solvent extraction feed solution proceeds to the extraction stage, consisting of three mixer- settlers in series. The aqueous and organic streams flow counter-currently to load impurities onto the organic phase. The organic stream is comprised of a D2EHPA extractant and a diluent.

The resulting extraction raffinate primarily contains cobalt, with nickel and magnesium present as impurities. The raffinate proceeds to ISX raffinate filtration to remove entrained organic from the aqueous stream prior to CoSX. The loaded organic stream flows to ISX scrubbing.

The raffinate proceeds to an after-settler, dual media filters, and a carbon column. The staged filtration process removes organic from solution, which reports to the crud treatment circuit, while the aqueous stream reports to the CoSX circuit.

The loaded organic containing impurities from extraction reports to two scrubbing mixer-settlers where sulphuric acid solution is added. Cobalt that was loaded onto the organic in the extraction stages is liberated and re-dissolves into the aqueous phase, which is returned to the extraction mixer-settlers. The organic stream from the scrubbing mixer-settler proceeds to the strip mixer- settler with the remaining impurities.

Following scrubbing, the loaded organic reports to ISX stripping. The circuit consists of two mixer- settlers that utilise a strip liquor comprised of filtered water and sulphuric acid. The acidic environment reduces the solubility of metals in the organic phase, effectively removing the impurities from the organic phase back into the stripping raffinate stream. The impurities strip raffinate stream is discharged to the effluent treatment, while the organic phase is recycled back to the extraction step. The ISX and CoSX mixer settlers are depicted in Figure 4-6. Tanks, pumps, and after-settlers are located on the ground floor of the building.

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Figure 4-6. Solvent Extraction Building, Second Floor

Source: Ausenco Engineering (2020).

During the operation of the mixer-settlers, a stable emulsion of degraded organic and solids forms at the interface of the aqueous and organic phases in the settler. The material is pumped to a tank from where it will report to a tricanter centrifuge to remove the unwanted material from the process and recover organic back to the organic makeup tank.

The ISX circuit is comprised of the following key equipment:

• solution extraction feed tank • heat exchanger

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• polishing filter • solvent extraction mixers and settlers • after-settler • co-matrix filters • carbon column • tricanter centrifuge

4.8 CoSX

Following ISX filtration, the raffinate stream containing soluble cobalt is sent to the CoSX circuit. CoSX operates in a similar manner to the ISX circuit; however, in this case the cobalt is extracted into the organic solvent as opposed to being kept in the aqueous stream.

The incoming raffinate is sent to a set of three extraction mixer-settlers. Sodium hydroxide is used to control pH during the extraction step. Organic containing Cyanex 272 extractant is introduced and cobalt preferentially loads onto the Cyanex 272 organic solvent. The cobalt- loaded organic then proceeds to the scrubbing mixer-settlers.

The aqueous raffinate stream exiting the cobalt solvent extraction is pumped to a filtration system comprised of an after-settler and dual media filters. Entrained organic is recovered from the raffinate, and the aqueous stream is used as process water or reports to effluent treatment.

The cobalt loaded organic reports to a set of six scrubbing mixer-settler units. Sulphuric acid is added to remove impurities such as magnesium, nickel and manganese that were loaded in the extraction stage from the cobalt loaded organic. Due to the drop in pH, some cobalt will also unload from the organic phase, and therefore the discharged scrub liquor is sent back to the extraction settlers where the cobalt can be recovered again. The loaded organic then proceeds to the stripping mixer-settlers.

In the stripping stage, the pH is lowered using a high concentration of sulphuric acid to bring the cobalt out of the organic and into the aqueous loaded strip liquor stream. The loaded strip liquor stream reports to filtration, while the barren organic stream is recycled to the extraction step.

The loaded strip liquor proceeds to a filtration system consisting of an after-settler and co-matrix filters. Filtration is performed to reduce organic losses and mitigate the impact of entrained organic on the cobalt sulphate product quality. The filtered strip liquor then proceeds to cobalt crystallisation. The CoSX circuit is depicted in Figure 4-6 in Section 4.7.

During the operation of the mixer-settlers, a stable emulsion of degraded organic and solids will form at the interface of the aqueous and organic phases in the settler. The material is pumped to a tank from where it then reports to a tricanter centrifuge to remove the unwanted material from the process and recover organic back to the organic makeup tank.

The CoSX circuit is comprised of the following key equipment:

• solvent extraction mixers and settlers • after-settlers

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• co-matrix filters • tricanter centrifuge

4.9 Crystallisation & Drying

The strip liquor solution reports to the crystalliser feed tank and is pumped to a mechanical vapour re-compression forced circulation crystalliser. Solution is continuously circulated to promote crystal growth, while evaporated water reports to a condenser and is removed from the system. A bleed stream of the supersaturated solution is continuously removed to maintain system equilibrium. This stream reports to a thickener and centrifuge for further dewatering.

The condenser is fed filtered water directly from the lake water pumps, prior to reporting to the filtered water tank. Condensate reports to the process water tank.

The bleed stream of cobalt sulphate crystals reports to a thickener and centrifuge for dewatering. Filtered water is introduced in the centrifuge to remove remaining the soluble cobalt solution. This also removes any remaining magnesium to below levels required for product specifications. Together they separate the solid and liquid components of the slurry, producing a dewatered product. The centrifuged crystals then report to a fluid bed dryer.

A portion of the aqueous stream is removed from the system and returned to neutralisation to prevent continuous accumulation of magnesium in the crystalliser.

Centrifuged crystals report to a fluid bed dryer to complete the dewatering process. Fines from the dryer are captured by a dust collector and report to a fine cobalt drum where the material can be reclaimed and bagged for sale. The final product then reports to the product storage and bagging system.

Following drying, the crystals report to a storage silo. A screw conveyor meters the product out of the silo into 1-tonne bulk bags, which are automatically weighed. The bags are then sealed and transported to storage by a forklift. The crystallisation, drying, and product bagging areas are depicted in Figure 4-7.

Figure 4-7. Crystallisation & Drying Area

Source: Ausenco Engineering (2020).

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The crystallisation and drying circuits are comprised of the following key equipment:

• forced circulation crystalliser • condenser • boiler • thickener • centrifuge • fluid bed dryer • dust collection system and baghouse • product bagging system

4.10 Sodium Treatment

The sodium treatment system removes sodium from the effluent prior to discharge. The sodium is contained in the CoSX extraction raffinate stream and is therefore removed prior to the effluent treatment process to minimise the treatment volumes. The concentration of sodium in the CoSX raffinate is nominally 19.4 g/L, and the final refinery effluent discharge concentration must be below 2.0 g/L.

Filtered CoSX raffinate is stored in a feed tank before being pumped to the sodium treatment system. A plate-and-frame feed/distillate heat exchanger pre-heats the effluent water with outgoing hot distillate. A small amount of anti-scalant is dosed before preheating to mitigate scaling of saturated salts on preheater surface and evaporator surface. The preheated feed is sprayed into the deaerator, which further heats the feed with low-pressure evaporator vent vapours to remove non-condensable gases such as oxygen. The brine is then pumped to the falling film evaporator.

The brine is introduced at the top of the evaporator vessel and flows in a downward direction as a falling film. Vapour from the evaporation process flows through the mist eliminator where brine droplets are removed. The vapour flows to the compressor where the pressure is increased, allowing it to be re-circulated as the heating medium. The vapour then flows to the shell side of the evaporator where it gives up its heat of vaporisation to the circulating brine. The vapour condenses into distillate and flows to the distillate tank. The distillate is pumped from the system through the feed/distillate heater. Concentrated brine is pumped from the crystalliser system for the evaporation process.

A solids content of approximately 28% will be achieved in the evaporator. The ultimate concentration achievable in the evaporator is limited by the boiling point elevation of the brine and relative concentrations of soluble salts. The concentrated brine will be directed to the crystalliser feed tank.

The forced circulation crystalliser is specially designed to precipitate, grow, and handle crystals in the brine as water is continuously evaporated. Recirculated brine is pumped through the forced circulation heat exchanger, where it will be heated above its boiling point. Boiling of the brine in the heat exchanger is suppressed by backpressure exerted by sufficient static head. The heated brine flows into the flash tank, where it flashes to its saturation temperature.

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The forced circulation crystalliser system is designed to handle the bulk precipitation of salts from the brine as evaporation occurs. The system concentrates the waste stream to a slurry of salt crystals containing about 50% total solids.

To control the foaming in the evaporator units, an antifoam dosing skid is included for the evaporator and crystalliser units. Additionally, the crystalliser is designed with a foam separator after the flash tank to minimise the impact of foam upsets during normal operation.

The brine slurry from the flash tank is further dewatered in a centrifuge to deliver dewatered salts. The centrate liquid from the centrifuge is collected in the crystalliser feed tank and recycled back to crystalliser. The solid waste is deposited into a bin, which is then transported for off-site disposal. The sodium treatment building and sodium treatment circuit is depicted in Figure 4-8.

Figure 4-8. Sodium Treatment Building

Source: Ausenco Engineering (2020).

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The sodium treatment circuit consists of the following key equipment:

• falling film evaporator • forced circulation crystalliser • centrifuge • loadout bin • anti-foam system • anti-scalant system

4.11 Effluent Treatment & Dewatering

Effluent streams from the refinery report to a collection tank before being pumped to two effluent treatment tanks in series. Treatment is achieved by adding slaked lime to a target pH of 11 in order to precipitate residual metals and ensure compliance with the existing site ECA. Once the slurry leaves the second treatment tank, it flows by gravity into a clarifier.

At the clarifier, flocculant is added to facilitate the settling of solids. The solids content produced in the underflow will be 15%. Half of the underflow will be recycled to the effluent feed tank to act as seed material promoting crystallisation of particles, improving settling action in the clarifier. The other half of this underflow reports to a horizontal vacuum belt filter.

The clarifier overflows by gravity to an overflow tank. Sulphuric acid is dosed to the tank to lower the pH to below 8.5 to comply with the Industrial Sewage Works ECA. The solution is then pumped to Lake Timiskaming.

Clarifier underflow is received at a filter feed tank. Filter feed pumps in a duty/standby configuration pump the slurry to the horizontal vacuum belt filter, which targets a final cake moisture content of 25%. The filter cake will report to a bunker where it is reclaimed by a front- end loader and haul truck. The filtrate will be pumped to the effluent treatment collection tank.

The second level of the effluent treatment circuit is depicted in Figure 4-9. Filtrate tanks, pumps, vacuum pumps, and receivers are located below the vacuum filters. A filtrate bunker and indicative sizes of the front-end loader and haul truck required to transport the filter cake are located on the ground floor and included in the diagram. The iron residue vacuum filter is also located in the vacuum filtration building.

The effluent treatment and dewatering circuits are comprised of the following key equipment:

• collection tank • treatment tanks • clarifier • horizontal vacuum belt filter

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Figure 4-9. Effluent Treatment Area & Vacuum Filtration Building, Second Floor

Source: Ausenco Engineering (2020).

4.12 Reagents

The monthly consumption of process reagents required to support the operation are summarised in Table 4-2.

Table 4-2. Consumption of Process Reagents & Consumables

Process Reagent Consumption (t/month) Sulfuric Acid (93%) 2,257.5 Calcium Carbonate 267.4 Sodium Hydroxide (50%) 1,746.8 Flocculant 0.1 Quicklime 285.2 Diluent 2.6 D2EHPA 0.2 Cyanex 272 1.1

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The systems associated with the storage and distribution of these reagents are described in the following subsections.

4.12.1 Flocculant

Flocculant will arrive as a granular powder in 25 kg bags. A self-contained mixing system will mix the flocculant with filtered water to a target density of 0.05% w/w. The iron residue thickener and the effluent treatment clarifier will both be fed from the storage tank by means of positive displacement pumps, with one pump dedicated to each thickener.

4.12.2 Organic Solvents

Two organic solvents are used in the refinery as extractants. D2EHPA and Cyanex 272 are used in the ISX and CoSX circuits, respectively. Both are delivered in tote containers and will be pumped by dedicated pumps to their circuits.

A diluent is also used as a vehicle to further disperse the extractant organics and optimise viscosity of the organic phase. This diluent is delivered to site in the form of tote container. A single pump will provide the distribution of diluent to both circuits.

4.12.3 Sulphuric Acid (H2SO4)

Sulphuric acid is used as the primary leach reagent and as a pH controller to lower the pH throughout the refinery. It will be supplied by means of 20-tonne tanker trucks at a concentration of 93% w/w. The tanker truck will deliver the acid to a main storage tank.

The neat sulphuric acid is pumped directly to the leach circuit and to effluent treatment. The remainder is distributed to a dilute acid tank where filtered water is mixed with acid to a concentration of 200 g/L.

The 200 g/L solution is pumped directly to the ISX and CoSX strip solution tanks. The 200 g/L solution also reports to two additional dilute acid tanks. In the second tank, the solution is prepared to a 31.5 g/L concentration for ISX scrubbing. In the third tank, the solution is prepared to a concentration of 70 g/L for CoSX scrubbing.

All sulphuric acid distribution pumps are fixed speed with continuous re-circulation to their respective tanks. The correct dosage is supplied by control valves.

4.12.4 Limestone (CaCO3)

Limestone at a purity of 90% w/w will be supplied by tanker truck in the form of a fine powder and stored in a silo. A screw conveyor will transfer the powder from the silo to the mix tank, where it will be prepared into a slurry with a solids content of 30% w/w. Once the slurry has been prepared, it will be stored in a storage tank before being pumped to a ring main where it is dosed to the neutralisation tanks by solenoid valves.

4.12.5 Lime (CaO)

Lime in the form of a fine powder will be supplied to site by tanker trucks and stored in a silo. A screw conveyor will transfer the lime from the silo to the lime slaker, where it will be ground and

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slurried to a concentration of 20% w/w. The lime will then report to a final mixing tank and a storage tank.

Once the lime slurry is prepared, it will be pumped to a ring main and dosed to the effluent treatment tanks by solenoid valves.

4.12.6 Sodium Hydroxide (NaOH)

Sodium hydroxide (NaOH), also known as caustic soda, is used as a pH modifier throughout the refinery to raise the pH of the system. The reagent will be delivered at 50% w/w in 40 m3 tanker trucks and unloaded into a storage tank. The tank is insulated and heated with steam to maintain the solution temperature at 30°C. The sodium hydroxide will be pumped from the storage tank into two dilution tanks.

Filtered water is dosed to the dilution tanks. The first tank will provide the reagent to the ISX extraction step at 10% w/w, while the solution in the second tank will report to the CoSX extraction step at 17% w/w.

4.13 Site Services

Various services are required to operate the refinery. The consumption of fuels, power, and water are summarised in Table 4-3.

Table 4-3. Process Energy & Water Consumption

Input Unit Consumption (units/month) Fresh Water m3 100,247 Power MWh 1,689 Natural Gas m3 159,297 Diesel L 10,402

The design relating to the supply and management of site services is summarised in the following subsections.

4.13.1 Filtered Water

Filtered water is supplied to the plant by two lake water pumps drawing water from Lake Timiskaming through a 3 km pipeline. Lake water pumps draw fresh water from the lake and pump it through sand filters, removing large solids particulate material and organic material. The filtered water reports to the cobalt crystalliser heat exchanger prior to reporting to the filtered water tank. The filtered water tank provides reserve volume for the fire water system.

The filtered water tank provides the water source for filtered water, gland water, potable water, wash water, and fire water. The filtered water pumps have a fixed speed and distribute flow throughout the plant to various users.

The filtered water purity from Lake Timiskaming is such that it can be used directly in the solvent extraction circuit and crystalliser, without the need for a demineralisation system.

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4.13.2 Fire Water

Fire water is supplied to the fire water package plant from the filtered water tank. The fire water package is designed to deliver water at 1,800 L/min and 850 kPa.

Included in this package is the fire water tank, fire water jockey pump, and diesel fire water pump. The fire water jockey pump is required to maintain pressure in the firewater distribution system. The diesel fire water pump will automatically start as required and will supply fire water to hydrants and hose reels.

A cost allowance has been included for an additional fire protection system for the solvent extraction building that includes fire water reticulation and foam suppression.

4.13.3 Gland Water

Gland water is distributed from the filtered water tank by gland water distribution pumps. Gland water is distributed around the plant by fixed speed gland water pumps arranged in duty/standby mode.

4.13.4 Potable Water

Filtered water flows from the filtered water tank to a potable water treatment system. The system is a vendor supplied package consisting of a filter, tannin remover, ultraviolet water purifier, chlorine pump, and a brine solution tank. The treated water then reports to a tepid water heater system to raise the temperature of the water before reporting to the potable water tank.

Potable water is pumped direct to the end user points, including safety showers and seal water for vacuum filters.

4.13.5 Tailings Storage Facility & Water Ponds

Tailings from the iron residue filter and effluent treatment filter are reclaimed from a bunker by a front-end loader and haul truck. The haul truck transports the tailings to the TSF, where it is dry stacked. The refinery will produce 52 t/d or 19,139 t/a of dry tailings at a moisture content of 25% to 30%.

Seepage and contact water are collected in the TSF seepage pond. A reclaim pump will pump excess water as required to the containment pond. The seepage pond and containment pond provide adequate residence time to contain design seepage and storm events.

4.13.6 Plant & Instrument Air

The plant and instrument air system consists of an air compressor, receiver, and air dryer that provide the plant with sufficient air at 690 kPa for equipment and instrument actuation.

4.13.7 Low Pressure Air

A low-pressure air blower supplies the plant with air at 100 kPa. Low-pressure air is sparged into the neutralisation tank and effluent treatment tanks.

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4.13.8 Natural Gas

Natural gas is supplied from an existing line to the refinery and is distributed to users within the refinery as required.

4.14 Process Control

4.14.1 Control System

The existing control system at the refinery includes two process logic control (PLC) systems located in the refinery control room. The PLCs were powered up and it was determined that the programs were likely able to run the existing process. The system is comprised of Allen Bradley PLC 5 controllers and remote I/O racks using Wonderware for HMI control/indication. The age of this system limits the ability to add newer vendor equipment with updated PLCs, newer PLC controllers/racks, or newer HMI systems.

Existing instruments were tested using some form of simulation back to the PLC/HMI. Most of the loops were accurate and minimal rewiring would be required to existing devices.

While new pumps will be installed to support the increased refinery throughput, the PLC infrastructure is installed accurately and capable of handling new inputs and outputs. Local control boxes distributed throughout the plant have spare conductors; spare channels in the installed cards are also available.

The existing control system will be upgraded to support the new process. The PLC, I/O cards, workstations, and software licences will be upgraded to support additional process equipment and newer control software.

Existing field instrumentation and local control infrastructure will be re-used where practical; however, most of the instrumentation on site will be purchased new. Existing process logic will be re-used where applicable.

4.14.2 Control Philosophy

The intent of the refinery control system is to provide sufficient automation to allow for safe and efficient operation and maximise recovery from the feed material. Control set points and inputs were considered when designing the process instrumentation to allow the control system to function with minimal operator intervention.

Field instrumentation provides input to PLCs, which are monitored by process control system (PCS). The PCS is configured to provide outputs to alarms, control the function of selected process equipment, and provide advisory comment to the plant operators. Logging and trending functions are available to assist in analysis of the operating plant data.

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5 Project Infrastructure

5.1 Overall Site

The overall site plan is shown in Figure 5-1 (overleaf). The figure shows the major project facilities, including the existing refinery building with the expanded facilities, new solvent extraction building, new sodium treatment building, and new TSF with associated water ponds. Access to the facility is from the north side of the property from the existing access road.

5.2 Roads

The refinery is located approximately 1.5 km east of the town of North Cobalt, Ontario, along Highway 567, which is locally referred to as “Silver Centre Road”. The refinery is accessed from Silver Centre Road via an existing 1.2 km single-lane gravel access road. This access road will be widened to allow two-way traffic, and resurfaced to accommodate the increase in truck traffic.

The existing in-plant road will also be extended, widened, and surfaced to create a ring road to promote traffic flow around the refinery. This will also extend to the TSF to allow the haul trucks to transport the filtered tailings from the refinery to the TSF.

5.3 Power Supply

5.3.1 Electrical Power Source

The refinery is currently connected to the utility grid, operated by Hydro One, via a dedicated 44 kV feeder line. The previous operation had a 2 MW connection agreement in place with Hydro One, and the existing distribution infrastructure was sized based on these loads.

The projected load for the expansion to the refinery is expected to exceed this capacity with a 3 MW maximum demand and a 2.5 MW average running load. The utility provider was consulted, and a review of the Hydro One station showed it could handle an increased demand from the refinery in excess of what is projected and could utilise the existing 44 kV feeder.

A Distribution System Impact Assessment will need to be completed by the utility to confirm that no changes have occurred within their distribution system. This will also include a detailed inspection of the utility-owned infrastructure to determine if any maintenance or minor line upgrades/replacements will be required. If required, these costs can be negotiated within the framework of the new connection agreement between Hydro One and First Cobalt.

5.3.2 Electrical Distribution

The refinery electrical system is based on 600 V, 3 phase, 60 Hz distribution. The 44 kV feed from Hydro One will be stepped down via an upgraded 4 MVA 44kV/600V ONAN transformer to 600 V at the refinery switchyard and will supply the plant main 4000 A, 600V switchgear housed in the refinery electrical room.

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Figure 5-1. Overall Project Site Plan

Source: Ausenco, 2020.

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This switchgear will feed the existing service entrance 3000 A, 600 V switchboard, which in turn feeds the existing MCCs in various locations around the refinery. The main entrance switchgear will also feed a new 2000 A, 600 V switchboard that will be housed in a new prefabricated E-room located near the solvent extraction and sodium treatment facilities and will distribute power to the mechanical equipment within those buildings.

5.4 Water

Fresh water is supplied to the refinery from Lake Timiskaming by an overland pipeline and pumping system. The pumphouse contains two freshwater pumps in a duty/standby configuration. Water is pumped 3 km through a buried pipeline to the project site, where it is stored in the filtered water tank.

5.5 Logistics Requirements

Due to the location of the refinery in Northern Ontario, raw materials and waste products will be trucked to and from the project site. The estimated average number of trucks required to support the refinery is summarised in Table 5-1.

Table 5-1. Refinery Trucking Requirements

Material or Reagent Quantity (t/month) Trucks per Month Trucks per Day Sulfuric Acid (93%) 2,258 59 2.9 Calcium Carbonate 267 7 0.3 Sodium Hydroxide (50%) 1,747 46 2.2 Quicklime 285 8 0.4 Feed (Cobalt Hydroxide) 4,649 122 6.0 Product (Cobalt Sulphate) 1,989 52 2.6 Off-site Disposal (Sodium Sulphate) 1,567 41 2.0 Total 12,762 336 16.4

Maintenance materials and other reagents, such as flocculant, extractants, and diluents, will be ordered on an as-needed basis, in addition to the trucking requirements stated above.

5.6 Tailings Storage Facility

5.6.1 Introduction

A feasibility-level design for a new TSF was completed by KP. The TSF will provide secure storage for tailings and temporary storage for decant water and direct precipitation. The TSF has been designed to protect groundwater and surface waters during operations and post-closure.

The TSF is located north of the refinery. The ultimate configuration of the TSF is shown in plan and section on Figure 5-2 and Figure 5-3, respectively.

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Figure 5-2. TSF – Site General Arrangement, Ultimate Facility

Source: Knight Piesold, 2020.

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Figure 5-3. TSF – Typical Embankment Sections

Source: Knight Piesold, 2020.

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5.6.2 Tailings Characteristics

The refinery will produce tailings that have been filtered prior to delivery to the TSF. Bench-scale metallurgical testing has been completed to produce initial tailings samples; however, a pilot- scale test has not yet been completed. The physical tailings characteristics used for this design were developed based on knowledge from other projects with similar tailings materials. Testing is recommended prior to developing the detailed design for the TSF. The key tailings characteristics selected for the TSF are as follows:

• filtered tailings preparation (filtered to a moisture content of 50%) • tailings production rate: 52 dry t/d • dry tailings density: 1.2 t/m3

Geochemical testwork was completed on one tailings sample obtained from bench-scale testing. The results from this sample indicated that ARD and metal leaching (ML) are not expected. The TSF has been designed assuming that the deposited tailings do not have ARD or ML characteristics. Further testing will be required during detailed design to confirm this assumption.

5.6.3 Design Basis Overview

5.6.3.1 Objectives

The principal objectives of the TSF design are to provide safe and secure storage for tailings and process water, and to protect groundwater and surface waters during operations and post- closure. The feasibility level design for the TSF has taken into account the following requirements:

• permanent, secure, and total confinement of all solid waste materials within an engineered facility • control and collection of potential seepage from the TSF basin and runoff from the embankments during operations • control, collection, and recycling of process water and runoff within the TSF basin • the inclusion of monitoring features for all aspects of the TSF to compare actual facility performance against design expectations and help verify the ongoing safe operation of the facility

Embankment construction will be staged, and construction will always be scheduled to ensure enough storage capacity and freeboard in the TSF to temporarily store runoff resulting from the environmental design flood (EDF) and to safety pass the inflow design flood (IDF).

5.6.3.2 Dam Hazard Potential Classification (HPC)

The dam hazard potential classification (HPC) has been determined based on the following criteria from the Lakes and Rivers Improvement Act (LRIA; OMNR, 2011) including Life Safety, Property Losses, Environmental Losses and Cultural - Built Heritage Losses.

The results of the HPC assessment for the TSF suggest that this facility be classified as having a high HPC based on the Life Safety criteria. The earthquake design ground motion (EDGM) and IDF thresholds used for the design reflect this classification.

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5.6.3.3 Seismic Design Criteria

The peak ground acceleration (PGA) for the TSF area was estimated using data from the 2015 National Building Code of Canada (NBCC) (NRC, 2015). A PGA of 0.143 g corresponding to the 1- in-2,475-year AEF was used for the stability assessment.

5.6.3.4 Hydrologic Design Criteria

Regional climate data are available from the Earlton A climate station, which is located 36 km north-northwest of the refinery and operated and maintained by Nav Canada. The data from 1981 to 2010 were used to determine average climate conditions for the refinery site.

The IDF for a facility with a “high” HPC based on the Life Safety criteria is specified as the runoff generated from the event that is 1/3 between the 1,000-year flood and probable maximum flood (PMF) (OMNR, 2011).

5.6.4 TSF Design

5.6.4.1 General

The TSF has been sized to permanently store approximately 336,500 t of tailings, or 280,000 m3 at an average settled dry density of 1.2 t/m3 over a period of approximately 17 years. The design consists of the TSF area for tailings storage and the TSF water pond for temporary storage of any decant water (bleed) and direct precipitation runoff.

5.6.4.2 Embankment Sections

Three embankment sections have been developed for the TSF design. Each of the sections is shown on Figure 5-3. The embankment sections are described as follows:

• TSF Embankment: This perimeter embankment will be used to contain the deposited tailings. This embankment will be constructed of fill zones consisting of imported granular material and locally borrowed clay and silt. The upstream portion of the embankment will consist of compacted clay and silt whereas the downstream portion of the embankment will consist of compacted, free-draining granular materials, expected to be a Granular B, Type II (OPSS, 2013) material. A buttress will be constructed against the downstream slope of the embankment using compacted clay and silt with drainage sections constructed of granular materials. • TSF Internal Embankment: This embankment will be used to contain the deposited tailings and allow for water accumulated in the TSF to seep through to the TSF water pond. This embankment has been designed as a flow-through, or leaky, embankment. The filter gradation relationship between the tailings and the zoned granular materials used in the Internal TSF embankment will need to be determined once a particle size gradation of the tailings is available. This work will be completed during detailed design and may require the addition of additional filter material zone within the internal TSF embankment.

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• TSF Water Pond Embankment: The TSF water pond will be used to contain water collected from seepage and runoff within the TSF basin. This embankment has been designed as a water-retaining embankment. It will consist of a central low-permeability core constructed from locally borrowed clay and silt with upstream and downstream portions constructed from imported granular materials, expected to be a Granular B, Type II (OPSS, 2013).

5.6.4.3 Embankment Staging

The TSF will be constructed in three stages over the life of the TSF. The staged construction is required to allow the foundation clay and silt materials to gain strength due to the pore water dissipation over time. The staged embankment construction also defers initial construction costs, thereby minimising the initial capital expenditure. The embankment stages are shown on Figure 5-3.

5.6.4.4 Seepage

The perimeter embankment for the TSF and TSF water pond will be constructed on the existing native clay and silt using locally borrowed, low-permeability native clay and silt. This will reduce seepage from the TSF basin. Seepage from the deposited tailings will be collected in the TSF water pond after it passes through the internal TSF embankment. No seepage collection system is planned for the perimeter of the TSF, as water will not be stored in the TSF for the long term.

5.6.4.5 Instrumentation

Vibrating wire piezometers will be installed in the embankments and embankment foundations to provide an indication of the performance of the embankment during construction and operations, and direct the timing for the staged embankment construction.

Survey monuments will be installed on the embankment crest following completion of each stage to monitor potential deflections and settlement of the embankments. A periodic survey of the monument locations will provide early warning of any displacements that need to be addressed.

5.6.4.6 Stability

A stability assessment was completed for the TSF embankment. Two sections were evaluated, including a 4.5 m embankment section with 0.5 m of freeboard, and a 6.0 m embankment section with 1.0 m of freeboard. The factor of safety was evaluated at the end of construction and maximum filling levels for each stage of construction. Under the planned raising and operating scenario, the stability analyses demonstrate that the TSF embankment will exceed the legislated stability requirements throughout operations and after closure.

The stability of the TSF water pond was confirmed based on a comparison to the factor of safety computed for the downstream slope for the 4.5 m high TSF embankments with similar slope angle (2H:1V) and foundation conditions. The factor of safety for the TSF water pond will exceed the legislated stability requirements throughout operations and after closure.

5.6.4.7 Tailings Management

Given the relatively small volume of daily production and the anticipated nature of the filtered tailings, mechanical transport using trucks is expected to be the most practical and cost-effective

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approach for tailings deposition. Once the tailings are transported from the refinery to the TSF, they will be dumped from the perimeter embankments and levelled using a small bulldozer. Initial placement will be completed from the perimeter of the TSF to allow the tailings and naturally occurring runoff to drain towards the centre of the TSF basin. Tailings deposition will rotate around the perimeter of the TSF to allow the placed tailings time to drain and consolidate before placement of the next lift of tailings.

The tailings deposition method and the equipment required will need to be reviewed during detailed design, after the physical characteristics of the tailings have been confirmed.

5.6.5 TSF Water Management

5.6.5.1 General

Water management will be an important part of TSF operations. The main goals for water management in the TSF are as follows:

• prevent runoff from the area surrounding the TSF from entering the TSF • provide drainage from the deposited tailings within the TSF • temporarily contain contact water from within the TSF for transfer to the refinery or contact water pond for treatment, if required, and release to the environment • provide emergency spillway(s) to discharge the IDF flood event • the operating strategy will be to pump accumulated water from the pond as soon as possible, thus minimising the stored water volume within the pond

5.6.5.2 Stormwater Management

The TSF has been sized to provide temporary storage of the EDF, which was selected as the 1-in- 50-year, 24-hour rainfall event. An extra 6,000 m3 of storage has been included to provide additional water storage capacity during Spring freshet. Pumping systems will be included to remove the EDF volume from the TSF water pond over 14 days. Water pumped from the TSF water pond will be directed to either to the refinery to be reused in the process or to the contact water pond.

The TSF basin will incorporate two emergency discharge spillways that will each be designed to pass the IDF from the TSF. The IDF was sized based on a high HPC for the TSF. One spillway will be located in the internal TSF embankment, which will transfer the IDF water flows from the TSF to the TSF water pond. The second spillway will be located in the TSF water pond embankment and will discharge directly to the environment. Both spillways are shown in plan on Figure 5-2; a typical cross-section is shown on Figure 5-3.

5.6.5.3 Water Balance

The water balance model for the TSF was developed to estimate the monthly volume of water reporting to the TSF water pond. The model considered average precipitation, evaporation, and runoff from the TSF basin.

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The results of the model indicated that the volume of water reporting to the TSF water pond during the Spring freshet (assumed to be in April) was approximately 24,500 m3.

5.6.6 Monitoring & Surveillance

The facility will be operated in compliance with applicable guidelines and standards.

Monitoring of the TSF will be carried out at specified regular intervals to evaluate the performance of the TMF and to refine the operating practices. Key monitoring requirements will include water levels, tailings deposition location, pump, and pipeline performance, reviewing vibrating wire piezometer data, and surveying of settlement monuments.

Regular inspections of the TSF will be completed as part of the TSF operations to confirm that the facility is being operated in accordance with the design intent. The inspections will include, at a minimum, visual inspection of the embankments, tailings beach and water pond, monthly inspections of all TSF components, detailed inspections following any extreme precipitation or seismic event, annual inspections by the design engineer, and formal dam safety reviews at specified intervals.

Studies, maps, reports, record documentation, and any other technical and scientific evidences used as criteria for the construction and operation of the TSF will be kept on site and available for review.

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6 Market Evaluation

First Cobalt retained Benchmark Mineral Intelligence, a London-based market intelligence firm for the electric vehicle supply chain, to prepare this chapter of the report.

6.1 Demand

Cobalt is used in a range of applications, but the largest single market is Li-ion batteries. The three primary segments for Li-ion batteries are consumer electronic devices, electric vehicles, and both stationary and grid energy storage. All three segments have a strong growth profile over the coming years and as such, the market for Li-ion batteries is expected to grow sharply. Electric vehicles are forecast to be the largest market for Li-ion batteries.

Cobalt is used in many other applications, all of which have remained largely stable. These include:

• super alloys: largest use after batteries, which includes aircraft and high-stress machines and components • hard metals: hardening of steel and other metals without making the component brittle— used in high-wear and high-impact components • ceramics/colours: as a pigment powder • catalysts: various chemical uses • hard facing: coatings on various metallic products • tires, soaps, paint driers: for various uses • magnets: various uses

Growth in cobalt demand through 2040 will be almost entirely dominated by the battery sector, fuelled predominantly by increased electric vehicle penetration uptake (see Figure 6-1). Demand growth is forecast to outpace the ability of suppliers to keep up by the mid-2020s. It should be expected that cobalt producers will not only be able to sell their products, but that strong prices should be able to be commanded due to the predicted shortfall.

Many factors underpin electric vehicle market growth in batteries, including legislative and technical considerations. Many governments have supported widespread adoption of electric vehicles over the coming two decades, through measures like banning of internal combustion engine vehicles, zero-emission vehicle market share targets, and subsidies or other consumer incentives.

The most important electric vehicle market globally is China, due to its population, government incentives and projected growth of their vehicle market. The Chinese government has been highly supportive of electric vehicles with considerable subsidies and targets for emissions-free vehicle sales penetration. The electric vehicle market will continue to have a strong growth profile at the expense of traditional internal combustion engine (ICE) vehicles, can be seen in Figure 6-2.

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Figure 6-1. Global Cobalt Demand by End Use (tonnes)

Global Cobalt Demand – by end use (tonnes)

Tonnes Co 1,000,000 Super Alloys Hard metals Ceramics/Colours 750,000 Catalysts Hard Facing Tyres, soaps, paint driers Magnets 500,000 Others Battery

250,000

0 20152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040

Source: Benchmark Mineral Intelligence (2020).

Figure 6-2. Global Electric Vehicle Sales & Penetration Rate Forecast, 2015-2040

Source: Benchmark Mineral Intelligence (2020).

Gigafactory (battery production) capacity is forecast to expand rapidly over the next decade to support the rapidly evolving electric vehicle market. The current large producers such as CATL, LG Chem, Tesla, BYD, Panasonic and Samsung will continue to dominate the market. However, many new entrants are anticipated, either as stand-alone battery plants or as part of a vertical integration strategy by automakers. Notably, VW Group and Geely both intend to construct and operate their own battery production facilities to supply cells for the vehicles produced by the respective companies.

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As a result, we forecast that cobalt demand from nickel-cobalt-manganese (NCM) batteries will increase from approximately 20,000 tonnes in 2019 to over 730,000 tonnes in 2040. The NCM 811 chemistry will begin to take over the market, increasing market shares from 5% in 2019 to 60% by 2040. The shift away from the higher-cobalt NCM 622 cathode that is widely used in electric vehicle batteries today will be more than offset by higher electric vehicle penetration and larger battery packs.

Figure 6-3. Battery-Driven Cobalt Demand to 2040

Battery Driven Cobalt Demand to 2040 – by cathode chemistry

Tonnes Co 1,000,000

LCO LMO NCA LMNO 750,000 NCM

500,000

250,000

0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Source: Benchmark Mineral Intelligence (2020).

6.2 Supply

6.2.1 Mining

Cobalt is mainly produced as a by-product from copper and nickel operations. The only primary cobalt operation in the world is the Bou Azzer operation in Morocco.

Approximately 74% of mined cobalt originates from the copper operations of the African Copper Belt, in the DRC. Much of that production is exported to China, which is responsible for 67% of global refined supply and a much higher proportion of refined cobalt sulphate material, at around 79% of the global production, which is used in batteries. Given the highly concentrated nature of the supply chain and the general lack of meaningful new mine supply elsewhere, cobalt sourcing is an important consideration for end users.

Table 6-1 presents an overview of the major cobalt miners. Seven producers account for over 60% of global supply.

Other major producers include, Chemaf (DRC), Jinchuan (DRC), Norilsk (Russia), Huayou Cobalt (DRC) and Sumitomo (Philippines).

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Table 6-1. Overview of Major Cobalt Miners

Company Major Mine Operations & Cobalt Productions Products

Glencore • Katanga Mining (KCC) – average 30,000 t/a life of mine cobalt production, • Cobalt hydroxide DRC • Cobalt briquettes • Mutanda Mining (MuMi) – average 22,000 t/a life of mine cobalt • Cut cathodes production, DRC • Murrin, refinery producing briquettes (Australia)

China Molybdenum • Tenke Mine, 18,000 t/a Cu/Co mine, DRC • Cobalt hydroxide

Vale • Voisey’s Bay, Canada, 1,700 t/a • Cobalt rounds • Sudbury, Canada, 800 t/a • Cobalt concentrate • Thompson, Canada, 500 t/a • New Caledonia, 2,900 t/a

Norilsk • Kola and Polar division Mines ~3,500 t/a • Cobalt sulphate • Harjavalta Refinery, Finland • Cut cathode • Kola (metal) Refinery, Russia

Sumitomo • Coral Bay and Taganito operations, Philippines • Cobalt chloride • Harima and Niihama refineries, Japan • Cut cathode

Ambatovy (Sumi. Corp. & Korea • Ambatovy Nickel-Cobalt Mine and Metal Refinery, 5,600 t/a nameplate • Cobalt briquettes Resource Corp) cobalt capacity, Madagascar

ERG • RTR tailings reclamation project, 16,000 t/a phase 1, 21,000 t/a phase 2, • Cobalt hydroxide DRC • Cobalt concentrate • Boss mine, DRC, currently on care and maintenance Chambishi Refinery, • Broken cathode Zambia on C&M

Source: Benchmark Mineral Intelligence (2020).

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Indonesia is forecast to become a significant cobalt producer in the future, as a by-product of large nickel projects planned to open in the country over the next decade. However, looking ahead towards 2040, the DRC is forecast to maintain its dominance over global mined cobalt supply, remaining at over 70% of production until 2025.

6.2.2 Refining

Cobalt refining typically takes place away from mine sites. Vale, Glencore and Sherritt are among some of the mining companies that refine cobalt from their own mining operations, but they produce metallic cobalt products. None of them refines cobalt sulphate, which is a key input for the battery market.

China is the largest refiner of cobalt and has increased its refinery production by 34,000 tonnes from 2015 to 2019. China now accounts for about 67% of refined cobalt production, up from 53% in 2015. It also controls 79% of the world’s cobalt sulphate production. By 2040, China is forecast to continue to dominate known refining capacity, remaining at around 68%, but increasing in the case of sulphate to about 83% of the market. Most of the raw material will come from the DRC.

Outside of China, refined cobalt production has also increased in Finland (Norilsk & Freeport) and Norway (Glencore). In the rest of the world, refined cobalt production has declined, as operations have been shutdown or struggled in the face of increased competition from China.

Besides First Cobalt, there are no plans for new cobalt refineries outside of China. However, with the current focus by governments and industry on the battery sector, supply chains are expected to develop outside of China. Putting aside permitting consideration, refineries can often be built and commissioned in 18-36 months.

The First Cobalt Refinery proposes to treat a cobalt intermediate (i.e., cobalt hydroxide) and produce a cobalt sulphate product for use in the Li-ion battery market. The complete value chain, from mine to electric vehicle, is shown in Figure 6-4.

Figure 6-4. Cobalt – From Mine to Electric Vehicles

Source: First Cobalt (2020).

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6.2.3 Recycling Market

Recycling today largely contributes to the cobalt supply utilised in the production of steel and other alloys. Li-ion battery recycling is a newer, growing phenomenon. As illustrated in Figure 6-5, the outlook for secondary cobalt supply from the recycling industry has good potential over time. Secondary Cobalt Forecast Secondary cobalt supply forecast Figure 6-5. Cobalt Recycling Forecast

Tonnes Proportion of total supply (%) 250,000 60%

50% 200,000

40% 150,000 30% 100,000 20%

50,000 10%

0 0%

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038 2039 2040 Source: Benchmark Mineral Intelligence (2020).

6.3 Cobalt Hydroxide Market

Cobalt hydroxide is the largest intermediate product market for refiners, with most of this material coming from the DRC. Small amounts of cobalt hydroxide come from Papua New Guinea and South Africa. Other cobalt intermediate products include cobalt concentrate (DRC), mixed sulphides (Cuba, Philippines) and smaller amounts of other material, such as matte, intermediate sulphate products, and alloys (e.g., Alliage Blanc).

Cobalt hydroxide can be refined into one of the following:

• cobalt metal: either as rounds, briquettes or powder • cobalt chemicals: notably cobalt sulphate for lithium-ion batteries, although there are other, smaller chemical markets

Figure 6-6 shows the run-of-mine production by major cobalt product type from 2015 until 2040. It is highly likely that any cobalt hydroxide sourced by First Cobalt will originate in the DRC, as this is the source of the majority of production.

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Figure 6-6. Mined Cobalt SupplyMined by TypeCobalt (tonnes) Supply by Type 2015 – 2040 (tonnes Co)

Tonnes Co 300,000 Concentrate Mixed Sulphide 250,000 Hydroxide Other

200,000

150,000

100,000

50,000

0 20152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040

Source: Benchmark Mineral Intelligence (2020).

Given the abundance of cobalt hydroxide intermediate product, many refinery flowsheets are specifically designed to receive this type of feed. First Cobalt’s key competitors in terms of securing hydroxide feed will be the Chinese refineries. Outside China, the main refineries purchasing cobalt hydroxide are Umicore (refineries and smelters in Belgium and Finland), Norilsk (mines in Russia and refinery in Finland) and Sumitomo (metal and chemical in Japan).

6.4 Cobalt Sulphate Market

Cobalt sulphate demand has exploded recently, driven by demand from Li-ion cathode producers, with supply keeping pace due to the ability of existing Chinese refineries to expand their plants. Figure 6-7 illustrates China’s current and expected future dominance in the production of cobalt sulphate.

Figure 6-7. Cobalt RefineriesCobalt with Refinieries Sulphate With Production Sulphate Capacity (tonnes) 2015 – 2040 (tonnes Co)

Tonnes Co 150,000 China Umicore Belgium Umicore Finland Norilsk Finland Sumitomo Japan 100,000

50,000

0 20152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040 Source: Benchmark Mineral Intelligence (2020).

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Given the concentration of refining in China, First Cobalt may not find it difficult to identify interested buyers for the refined material (see Figure 6-8).

Figure 6-8. Refined Cobalt SupplyRefined (tonnes) Cobalt Supply 2015 – 2040 (tonnes Co)

Tonnes Co 500,000 DRC Europe & Russia South East Asia Australia Other Africa China South & Central America Japan & South Korea North America Unplanned New Supply

250,000

0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Source: Benchmark Mineral Intelligence (2020).

Crucially for First Cobalt, almost all automotive producers outside of China would like to source cobalt sulphate either in their own region, or from suppliers located outside of China. Furthermore, ex-China supply is currently small (non-existent in North America), with OEMs and chemical firms like BASF competing for product.

Figure 6-9 outlines the additional refining capacity that is currently under construction for planned future development. This forecast shows some growth in Europe but does not yet reflect First Cobalt’s plans.

Figure 6-9. Cathode Capacity ExpansionLithium Ion Forecast Cathode Capacity Expansion Forecast

Tonnes Cathode 1,700,000 1,600,000 China 1,500,000 Japan 1,400,000 South Korea 1,300,000 Taiwan 1,200,000 North America 1,100,000 Europe 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Capacity Construction Planned Source: Benchmark Mineral Intelligence (2020).

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6.5 Price Forecasts

6.5.1 Cobalt Metal

Cobalt is generally mined as a by-product, and total annual production is very small relative to other metals like copper and nickel. These two factors have contributed the commodity’s volatility over the years. Figure 6-10 reflects this volatility, with market spikes and a return to longer-term price levels.

Figure 6-10. Cobalt Prices

Source: InfoMine.com (2020).

After an increase in price in 2017, the market saw a sharp pullback in 2018, in part due to a pronounced increase in artisanal production in the DRC. However, the cobalt price is forecast to increase again, as demand once again outstrips supply. With the increased popularity of electric vehicles around the world, prices are forecast to remain elevated going forward.

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The Benchmark Minerals medium- and long-term price forecast methodology considers the following factors:

• Balance of supply and demand – Based on our analysis of the development of demand over time, and our understanding of the pipeline of new greenfield and brownfield capacity, we are able to make an assessment of the extent of over- and under-supply in the market over time, and how this is likely to impact prices • Production costs for the marginal cost producer – Long run pricing in commodity markets is often determined by the level at which the highest cost producer needed to supply the market can continue to operate. For our cobalt forecast, we expect this will be less of a factor. Due to the fact that cobalt is a by-product and the need to stimulate new projects to be developed, price is expected to be well above the marginal producer cost. • Incentive pricing for new greenfield and brownfield capacity investment – As stated, there will be an ongoing requirement for new greenfield capacity over the course of the forecast period. We have conducted an IRR analysis for a “typical” greenfield cobalt project, which suggests that at a price level of US$65,000 per tonne, the IRR would be 35%. This approximates the level that junior miners are using for their assessment of project economics, and reflects the fact that once lower cost new supply comes online, a need will remain for the development of higher capital cost projects outside of the DRC over time. Projects within the DRC typically require a higher IRR to justify the political risk associated with the country.

Since cobalt is primarily produced as a by-product of other mining processes—chiefly copper and nickel—fluctuations in supply and pricing are not necessarily linked to developments in the cobalt market itself, which contributes to price volatility.

Cobalt demand will rise sharply in the coming years, despite thrifting of the material in cathode configurations, such as NCM 622 and NCM 811. It is forecast that cobalt prices will continue to rise in the long term due to capacity constraints.

Figure 6-11 and Figure 6-12 demonstrate the cobalt supply demand balance and price forecast evolution. Our long-term cobalt price forecast is approximately $59,100/t or $26.81/lb. Over next several years, we expect cobalt price to steadily increase and exceed our long-term price from 2024 to 2030 (Figure 6-12).

After taking our price forecast into consideration, we understand that First Cobalt has adopted a lower long-term price assumption of $25/lb ($55,116/t) for its financial modelling. We believe that this assumption is reasonable, conservative and well supported by our market data.

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Figure 6-11. Cobalt Supply Demand Balance, 2015 to 2040

Tonnes 1,000,000

500,000

0

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039 2040

Total Demand Probable additonal tonnes Secondary supply Highly Probable additonal tonnes Possible additonal tonnes Operational supply

Source: Benchmark Mineral Intelligence (2020).

Cobalt Battery Metal Price Forecast (US$/t) Figure 6-12. Cobalt Price Forecast – Battery Metal (US$/t)

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 20152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040

1 Cobalt (battery metal) Source: Benchmark Mineral Intelligence (2020).

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6.5.2 Cobalt Hydroxide

First Cobalt intends to purchase third-party cobalt hydroxide, most likely from DRC-based sources. Cobalt hydroxide is a cobalt intermediate product that could contain 20% to 30% cobalt. Since First Cobalt intends to treat this intermediate product, the pricing in this market segment in important for the refinery.

The following are the key parameters to understanding pricing of this product:

• Cobalt hydroxide is priced at a discount to the average of the low of the monthly Metal Bulletin Low Grade Cobalt price of around 70%, with the average payability over the last two years being 69%. • Within contracts, this is normally done with reference to a specific quotation period, known as a QP. The QP refers to the average price over a specific time frame, for example the month following the month of shipment. • The differential between the cobalt price and the payability factor represents the margin potential for the refinery, after deducting operating expenses, sustaining capital and taxes.

The historical two-year payability factor for cobalt hydroxide is shown in Figure 6-13. Cobalt Hydroxide Payable Cobalt (%) Figure 6-13. Two-Year Cobalt Hydroxide Payability Factor

100

95

90

85

80

75 Average Payable Co: 69% 70

65

60

55

50 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20

Source: Benchmark Mineral Intelligence (2020).

With respect to pricing, Benchmark Minerals tracks an historical CIF Asia cobalt hydroxide price for material from the DRC (see Figure 6-14). This price has fluctuated widely over the past two years—a reflection of the movements in the cobalt metal price.

Benchmark Minerals has produced a cobalt hydroxide price forecast for First Cobalt based on the following key assumptions regards the pricing mechanism, quotation period and quality:

• cobalt content: 20% cobalt • payable cobalt content: 70% of contained cobalt • penalty elements: none

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• quotation period: fixed as month of delivery • base cobalt metal price: benchmark battery-grade cobalt forecast

The price forecast from Benchmark minerals is presented in Figure 6-15. Historical Cobalt Hydroxide Prices (US$/t) Figure 6-14. Historical Cobalt Hydroxide Price (US$/t)

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan ’18 ’18 ’18 ’18 ’18 ’18 ’18 ’18 ’18 ’18 ’18 ’18 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’19 ’20

Source: Benchmark Mineral Intelligence (2020).

Cobalt Metal & Cobalt Hydroxide Price Forecast (US$/t) Figure 6-15. Cobalt Metal & Cobalt Hydroxide Price Forecast (US$/t)

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 20152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040 Cobalt (battery metal)1 Cobalt Hydroxide Source: Benchmark Mineral Intelligence (2020).

6.5.3 Cobalt Sulphate Pricing

First Cobalt will produce cobalt sulphate for the battery market, specifically for consumption by lithium-ion cathode producers. This section will discuss the pricing mechanism for battery-grade cobalt sulphate and provide a battery-grade cobalt sulphate price forecast.

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Cobalt sulphate for the battery market is typically priced at a premium, in terms of contained cobalt, to the battery-grade cobalt metal price. However, this is not always the case and is subject to movements in supply and demand of sulphate. The sulphate premium reflects the following:

• Cost of conversion: it takes approximately 5 tonnes of sulphuric acid to produce 1 tonne of cobalt sulphate • Cost of capital for converters: in order to incentivise refineries and mining companies to convert cobalt products (typically powder or briquettes) into sulphate, the cost of capital of the facility must be considered • Specifications: typical specifications are 20.5% contained cobalt in cobalt sulphate

Table 6-2 provides an example of the more detailed specifications for the material in Europe and China, although each cathode maker has their own unique specifications.

Table 6-2. Typical Cobalt Sulphate Specifications

Element Unit China Europe Cobalt % >21.00 >20.5 Manganese ppm <3 <500 Iron ppm <3 <100 Nickel ppm <80 22.1 Copper ppm <3 <20 Sodium ppm <10 1.5 Calcium ppm <10 1 Magnesium ppm <10 0.6 Zinc ppm <3 <20 Lead ppm <3 <30 Chromium ppm <3 <40 Cadmium ppm <3 0.1 Aluminum ppm <3 0.5 Silicon ppm <10 1.1 Potassium ppm <3 0.6 Chloride ppm <10 <11 Insolubles ppm <50 5.1 Source: Benchmark Mineral Intelligence (2020).

Figure 6-16 presents the historical pricing for cobalt sulphate, which is tracked and reported by Benchmark Minerals.

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Historical Cobalt Sulphate Prices (US$/t) Figure 6-16. Historical Cobalt Sulphate Prices (US$/t)

25,000

20,000

15,000

10,000

5,000

0

Jul ’17 Jul Jul ’18 Jul ’19 Jul

Jan ’19 Jan ’20 Jan Jan ’17 Jan ’18 Jan

Jun ’17 Jun ’18 Jun Jun ’19Jun

Apr ’19 Apr Apr ’17 Apr ’18 Apr

Oct ’17Oct ’18Oct Oct ’19Oct

Sep ’18 Sep ’19 Sep Sep ’17 Sep

Feb ’18 Feb ’19 Feb Feb ’17 Feb

Dec ’19 Dec Dec ’17 Dec ’18 Dec

Nov ’17 Nov Nov ’18 Nov ’19 Nov

Aug ’19Aug Aug ’17Aug ’18Aug

Mar ’17Mar ’18Mar Mar ’19Mar

May ’18 May ’19 May May ’17 May Source: Benchmark Mineral Intelligence (2020).

Benchmark Minerals also reports a cobalt sulphate price forecast as part of its regular price forecasting service. The price reported is based on the following:

• cobalt content: 20.5% cobalt • base cobalt metal price: benchmark battery-grade cobalt forecast

The price forecast from Benchmark Minerals is presented in Figure 6-17. Cobalt Battery Metal & Cobalt Sulphate Price Forecast (US$/t) Figure 6-17. Cobalt Battery Metal & Cobalt Sulphate Price Forecast (US$/t)

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 20152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040 Cobalt (battery metal)1 Cobalt Sulphate Source: Benchmark Mineral Intelligence (2020)

6.6 Contracts

First Cobalt has not entered any material contracts relating to development of the refinery.

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7 Environmental Studies, Permitting and Community

7.1 Environmental Baseline Studies

Environmental baseline studies were previously completed to support historical refinery activities and associated permitting processes. First Cobalt retained SEI to conduct a gap analysis to identify additional environmental baseline studies that may be required to support the expansion to 5 kt/a of cobalt production (or 50 t/d of feed). In 2019, SEI initiated the following supplementary baseline studies to support project permitting:

• atmospheric environment (baseline noise assessments) • hydrology • surface water quality • terrestrial environment

A description of available baseline data, as well as data being collected through SEI’s supplementary studies, is provided in the subsections below.

7.1.1 Atmospheric Environment

Baseline noise studies were initiated in 2019 to establish background noise levels in proximity to the refinery and the proposed haul route. These studies have been completed to produce a Noise Impact Assessment that will be required to support the amendment to the existing Air and Noise Environmental Compliance Approval (Air and Noise ECA).

Emissions to the atmosphere from the expanded refinery will have to be quantified and modelled. This information will be consolidated in an updated Emissions Summary and Dispersion Modelling Report, which will also support the amendment to the existing Air and Noise ECA. Based on the air emissions predicted to the present from this facility, the amendment to the Air and Noise ECA should be straightforward.

7.1.2 Climate & Hydrology

Long-term climate records are available from the Environment Canada and Climate Change (ECCC) Earlton Station Number 6072225. The station is located approximately 35 km north of the refinery. These climate data are representative of conditions at the site and provide the necessary data to complete the required environmental studies (i.e., development of the water balance and amendment to air modelling for the Air and Noise ECA).

The hydrological regime of Slate Creek was previously characterised to support historical development and permitting processes. The effluent from the existing refinery is permitted to be discharged to Slate Creek under the existing Industrial Sewage Works Environmental Compliance Approval (ISW ECA).

Based on the proposed expansion of the refinery to 50 t/d and the limited assimilative capacity of Slate Creek, Lake Timiskaming is now being considered as the preferred location for discharge from the expanded refinery. Water levels in Lake Timiskaming and downstream flows in the Ottawa River are regulated by the Lake Timiskaming Dam Complex, so extensive water level and

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flow databases are available for this waterbody. These data will be used to support the preparation of an Assimilative Capacity Assessment for the discharge from the expanded refinery to Lake Timiskaming.

Fresh water for use at the refinery is taken from Lake Timiskaming. A pump house on Lake Timiskaming contains the pumps, which convey lake water to the refinery via an existing buried pipeline. A PTTW application, including the necessary Surface Water Study to support the proposed water taking, was prepared and submitted to the Ministry of Environment, Conservation and Parks (MECP) in March 2020. This PTTW application was prepared to support the necessary domestic and industrial water requirements for the refinery expansion. Therefore, hydrological conditions of Lake Timiskaming were characterised by SEI as part of this Surface Water Study. Due to the size of Lake Timiskaming—with a surface area of 295 km2; length of 110 km; estimated volume of 1.05 x 1010 m3; and estimated seven-day average low flow with a statistical recurrence interval of 20 years (7Q20) of 224 m3/s—drawing 0.042 m3/s as required will have a negligible (i.e., 0.019%) impact on the lake.

An Assimilative Capacity Study will be required to support the ISW ECA amendment to approve the discharge of the expanded facility’s discharge to Lake Timiskaming. The estimated annual daily flow of effluent from the expanded refinery will be 2,000 m3. Given the estimated 7Q20 within Lake Timiskaming of 19,353,600 m3/d (i.e., 224 m3/s), the lake will provide more than sufficient assimilative capacity for the discharge from the refinery. The proposed discharge will represent approximately 0.01% of the estimated 7Q20 within the lake.

7.1.3 Surface Water Monitoring & Quality

An expanded baseline surface water quality sampling program was initiated in 2019. Water quality samples are collected on a monthly basis, when conditions are safe, to characterise the water quality within Farr Creek, Slate Creek, and Lake Timiskaming. The ongoing water quality sampling program will help characterise the natural variability of the water quality within these waterbodies. Water quality sampling in Slate Creek has also been historically completed as part of baseline studies and previous operations at this facility.

Lake Timiskaming water quality is typical of other similar waterbodies in northern Ontario. Concentrations of dissolved aluminum and total iron have consistently been reported at concentrations above their respective Provincial Water Quality Objective (PWQO) of 0.075 mg/L and 0.3 mg/L, respectively. Based on an SEI database of analytical data for sample sites in the Timiskaming area, concentrations of iron greater than the PWQO commonly occur naturally in northern Ontario. A five-year data set for a sampling site in Lake Timiskaming, reports an average total iron concentration of 1.3 mg/L. For several creeks within the Timiskaming area, the average iron concentrations range from 0.19 to 1.53 mg/L over more than a ten-year sampling period. Similarly, based on an SEI database for sample sites in the Timiskaming area, a five-year data set for a sampling site in Lake Timiskaming reports an average dissolved aluminum concentration of 0.10 mg/L. For several creeks within the Timiskaming area, the average dissolved aluminum concentrations range from 0.02 to 0.08 mg/L over a 10-year sampling period. Concentrations of total chromium, total copper, total arsenic, and total lead have been observed at concentrations above their respective PWQOs in at least one sample collected in Lake Timiskaming since this supplementary collection program began in 2019. All other parameters meet their respective PWQO.

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Farr Creek is well documented as having been affected by historical Cobalt Mining Camp activities and subsequently contains elevated concentrations of arsenic and cobalt. Due to the small assimilative capacity of Slate Creek, it will not be considered for effluent discharge.

As indicated above, an Assimilative Capacity Study will be required to support the ISW ECA amendment for the discharge from the expanded refinery. As such, surface water quality sampling should continue to support the Assimilative Capacity Study. Once the expanded facility is operational, the permits and approvals will dictate the surface water quality monitoring requirements.

7.1.4 Groundwater Monitoring & Quality

Groundwater monitoring, which includes measurements of groundwater levels and the collection of samples for analyses, continues on a quarterly basis as part of the required compliance monitoring program stipulated in the existing 12 t/d ISW ECA. Groundwater quality samples are collected from seven monitoring wells located on the refinery properties. The groundwater monitoring results are provided to the MECP in a mandatory annual report in accordance with the existing 12 t/d ISW ECA.

Cobalt concentrations above the Table 9 Standards (Ontario Groundwater Standards to be applied within 30 m of a waterbody in a non-potable groundwater situation) have been observed in groundwater collected from two monitoring wells downgradient of the Autoclave Pond. A small seep was discovered at the base of the autoclave pond that was subsequently repaired. After the repair of this seep, it is anticipated that these groundwater cobalt concentrations will decline. The groundwater monitoring program will continue as part of the 12 t/d ISW ECA.

SEI recommends that the groundwater monitoring network be expanded to include the new location proposed for the TSF. The new TSF is proposed to be constructed in one of CCRL’s fields north of the refinery. Monitoring wells should be installed prior to the construction of the new TSF to establish background groundwater conditions within this area.

7.1.5 Terrestrial Environment

The refinery is located on a brownfield site that has supported historical mining activity as well as sporadic, but minimal, refining activity. Hay farming has also taken place in this field north of the 12 t/d refinery. SEI was retained to conduct a natural heritage assessment of the refinery property and proposed footprint for the new TSF. Results of the desktop study concluded that there were no significant wildlife habitat or other natural heritage features located within the proposed expansion area or in the fields to the north.

However, certain species, such as bats and barn swallows, which are classified as Species at Risk, may utilise the existing refinery infrastructure. As such, if there are any plans to demolish or remove infrastructure from the site, it is recommended that targeted surveys for bats and barn swallows be completed, in advance, to ensure that there are no contraventions of the Endangered Species Act.

7.1.6 Aquatic Environment

Aquatic baseline studies were previously completed in Slate Creek to support previous permitting activities. Aquatic studies within Lake Timiskaming have not been completed, however, the

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aquatic environment present within this waterbody has been characterised by others, including the province. Additional aquatic studies, including bathymetry in the location of the proposed discharge to Lake Timiskaming and the identification of any sensitive fish habitat in the area of the proposed discharge, may be required to support the amendment to the ISW ECA for the discharge from the 50 t/d facility.

7.2 Tailings & Water Management

7.2.1 Tailings Management

As outlined in Chapter 5, construction of a new TSF is required to manage tailings from the expanded facility. Tailings will be managed in an on-site offline engineered impoundment structure that will require approval via amendments to the ISW ECA and Closure Plan (see Section 7.2.5).

7.2.2 Water Management

Water will need to be collected, treated, and discharged in accordance with an amended ISW ECA, Ontario Regulation 560/94: Effluent Monitoring and Effluent Limits – Metal Mining Sector, and the Metal and Diamond Mining Effluent Regulations (MDMER). An amendment to the existing ISW ECA will be required, as outlined in Section 7.2.5 and discussed above. An Assimilative Capacity Assessment of the proposed discharge to Lake Timiskaming will be required to support the application to amend the ISW ECA.

Water management requirements during the various phases of closure for the expanded refinery will be defined in the amended Closure Plan (refer to Section 7.4).

7.2.3 Federal & Provincial Environmental Permitting Regime

Federally, under the Impact Assessment Act (IAA), only physical activities listed under the Physical Activities Regulations: SOR/2019-285, are considered designated projects. The proposed expansion to 50 t/d is not considered a designated project; as such, an environmental assessment under the IAA will not be required.

In Ontario, private sector mineral processing developments, such as those proposed as part of this project, are not subject to individual environmental assessment requirements under the Ontario Environmental Assessment Act. However, certain ancillary activities (e.g., disposition of Crown resources or the construction of major electrical infrastructure) may trigger the need for environmental assessment under the Ontario Environmental Assessment Act. There are no known activities currently planned for the expansion of the refinery that would require an environmental assessment under the Act.

7.2.4 Existing & Required Permits & Approvals

A list of the existing environmental permits and approvals held by the CCR is provided in Table 7-1.

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Table 7-1. Existing Permits & Approvals for 12 t/d Operation

Permit/Approval Agency Purpose Air and Noise Ministry of the Approval to discharge the 12 t/d refinery air Environmental Environment, emissions and noise to the environment. Compliance Approval Conservation and Parks Industrial Sewage Ministry of the Approval to collect, treat, and discharge the Works Environmental Environment, industrial sewage produced from the 12 t/d Compliance Approval Conservation and Parks facility to the Slate Creek at a rate not to exceed 735 m3/d. Permit to Take Water Ministry of the Taking of greater than 50,000 L/d of water from (not currently Environment, Lake Timiskaming. permitted to take Conservation and Parks water) Closure Plan and Ministry of Energy, Filed Closure Plan, along with associated Financial Assurance Northern Development financial assurance, allows for construction, and Mines operation, and closure of the CCR at 12 t/d. Septic System Timiskaming District Treatment and disposal of domestic sewage (<10,000 L/d) Health Unit from CCR.

7.2.5 Required Permits & Approvals

Table 7-2 provides a list of the permits and approvals that will be required to expand the refinery to 50 t/d.

Table 7-2. List of Required Permits & Approvals for 50 t/d Operation

Permit/Approval Agency Purpose Amendment - Air Ministry of the An amendment will be required to account for the increased and Noise Environment, throughput of the facility as well as the associated air and Environmental Conservation noise emissions to the environment from the 50 t/d facility. Compliance and Parks Approval Amendment - Ministry of the An amendment will be required to account for the increased Industrial Environment, throughput of the facility, the proposed new location for the Sewage Works Conservation discharge (Lake Timiskaming), and the associated changes to Environmental and Parks the on-site and off-site industrial sewage works, including Compliance tailings and water management facilities. Approval Permit to Take Ministry of the The permit application submitted in March 2020 included a Water (submitted Environment, maximum water taking that was sufficient to support the 50 t/d March 2020) Conservation expanded facility. and Parks Closure Plan Ministry of An amendment to the filed Closure Plan and submission of Amendment Energy, Northern additional financial assurance will be required to account for Development and the proposed material changes to the CCR, including expansion Mines of the refinery and the tailings and water storage facilities. Work Permits (if Ministry of Approval for certain work activities on Crown land and required) Natural shorelines of lakes and rivers (e.g., construction of a new Resources discharge location in Lake Timiskaming).

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7.3 Social Setting, Consultation & Agreements

CCRL has regularly kept local municipalities and Indigenous communities apprised of their activities. Frank Santaguida, P.Geo., Vice President of Exploration for First Cobalt and Director of CCRL, serves as the consistent liaison between the company and the local communities. SEI has been working as First Cobalt’s Community Engagement Consultant since 2018 and on the CCRL project since 2019.

Local municipalities with an interest in the project include the Township of Coleman, the Town of Cobalt, and the City of Temiskaming Shores. CCRL (and formerly First Cobalt) has engaged the following Indigenous communities to keep them informed and to obtain input from these communities on ongoing exploration projects, recommencing operations at the refinery, and the Permit to Take Water for the expansion of the refinery to 50 t/d:

• Matachewan First Nation (MFN) • Temagami First Nation (TemFN) • Timiskaming First Nation (TFN) • Métis Nation of Ontario (MNO)

Since 2018, First Cobalt and CCRL have met with these communities and have corresponded via telephone, email, and mail to provide project details. First Cobalt has also conducted site visits with Indigenous community members on exploration properties. First Cobalt and TFN have established a Communications Protocol and an Exploration Agreement.

CCRL is committed to continuing their engagement and consultation activities with stakeholders and Indigenous communities. All engagement and consultation activities related to the project are recorded in the project’s Record of Consultation.

7.4 Closure Requirements

Closure of the CCR is regulated under the Ontario Mining Act and more specifically Ontario Regulation 240/00: Mine Development and Closure under Part VII of the Act (“O. Reg 240/00”). O. Reg. 240/00 outlines the rehabilitation measures required (i.e., Mine Rehabilitation Code of Ontario (Schedule 1); the requirements for physical, chemical, and biological monitoring programs; as well as the financial assurance requirements.

Closure of the 50 t/d expanded facility will be completed in accordance with O. Reg. 240/00 with the fundamental considerations being to ensure physical and chemical stability of the site, at closure, in order to protect human health and the environment.

There is an approved (filed) Closure Plan with the Ministry of Energy, Northern Development and Mines and the required financial assurance for the 12 t/d facility. However, a Closure Plan amendment will be required, as outlined in Section 7.2.5, to account for the proposed expansion of the CCR to 50 t/d. Additional financial assurance will accompany the Closure Plan amendment to account for the additional costs required to implement the rehabilitation and monitoring activities which will be included in the 50 t/d Closure Plan amendment

An overview of the additional rehabilitation and monitoring activities that will need to be considered as part of the 50 t/d expansion Closure Plan amendment are summarised below:

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• decommissioning and removal of additional buildings, equipment, powerlines, and machinery for reuse, salvage, and/or disposal • decommissioning and removal of additional pipelines and associated equipment • rehabilitation of new corridors, roads, and laydown areas, including revegetation • decommissioning and rehabilitation of new and expanded water and tailings storage facilities • expansion of the existing physical, chemical, and biological monitoring programs to account for additional potential impacts of the project at closure

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8 Capital Cost

The capital cost estimate was prepared in accordance with a Class 3 Feasibility Study estimate, as defined by Ausenco’s capital cost estimating guidelines. The capital cost estimate is presented in Q1 2020 US dollars (USD or US$) and deemed to have an accuracy of ±15%.

The capital cost estimate was developed from first principles and based on engineering deliverables, equipment pricing, and contractor rates obtained during the feasibility study. The estimate for restarting the refinery is summarised below in Table 8-1.

Prior to developing the capital cost estimate for the 5 kt/a expansion, the site field inspection program was completed at the refinery to assess the condition of existing equipment and determine which equipment can be refurbished, reused or repurposed. The field inspection program also quantified some of the scope of work for the capital cost estimate.

Table 8-1. Capital Cost Estimate

Description Value (US$M) Mechanical Equipment 13.5 Electrical Equipment (including bulks) 2.2 Piping 3.2 Architectural 1.3 Platework & Tanks 5.8 Structural Steel 1.6 Instrumentation Equipment (including bulks) 1.6 Tailings Storage Facility 1.2 Concrete 0.8 Sodium Removal 9.4 Other Directs 0.8 Subtotal Direct Cost 41.4 Engineering Procurement Construction and Management (EPCM) 3.9 Spares & First Fills 2.5 Field Indirects 1.5 Other Indirects 1.5 Subtotal Indirect Cost 9.4 Owner’s Costs 1.0 Contingency 4.2 Total 56.0

The stability modelling of the TSF, completed by KP, indicated that the construction would need to occur in multiple stages throughout the operating life of the refinery. These costs are considered sustaining capital costs and are summarised in Table 8-2.

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Table 8-2. TSF Expansion Cost

Description Value (US$M) TSF – Stage 2 0.4 TSF – Stage 3 0.2

8.1 Estimate Basis

The capital cost estimate to expand the refinery is inclusive of the scope of facilities stated below:

• feed preparation and re-pulping of cobalt hydroxide material • atmospheric leaching • neutralisation followed by cyclone classification, gypsum removal, thickening, and vacuum filtration • ISX, including extraction raffinate filtration and crud treatment • CoSX, including extraction raffinate and strip liquor filtration, and crud treatment • crystallisation, centrifuging, drying, and product bagging • sodium treatment, which includes evaporation and crystallisation • effluent treatment with lime followed by clarification and filtration prior to discharging into Lake Timiskaming

In addition to the scope of facilities, the capital cost estimate to replace, refurbish and expand upon the existing facility includes the following cost items:

• architectural • bulk earthworks • concrete • mechanical equipment • electrical equipment • platework • laboratory equipment • instrumentation • electrical and instrumentation and control bulks • piping • structural steel • contractor directs and indirects • EPCM directs and indirects • vendor representatives • freight

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• Owner’s costs • contingency

8.2 Base Date & Currency

The estimate is presented in Q1 2020 US dollars (USD or US$). Quotations and costs in Canadian dollars were converted at an exchange rate of 1.375.

8.3 Accuracy

The capital cost estimate is a Class 3 (feasibility-level) estimate with an accuracy of ±15%.

8.4 Estimating Methodology

The capital cost estimate is based on process design criteria, plant mass balance (METSIM model), process flow diagrams, preliminary general arrangement drawings, equipment sizing information, and field program inspection and measurements.

Information obtained from the field program and preliminary general arrangement drawings enabled the assessment of MTO quantities for earthworks, concrete, steelwork, mechanical, electrical and instrumentation for the refinery.

Multiple equipment suppliers and vendors were approached for quotations for each piece of major equipment. The request for quotation that was issued included preliminary design information, such as data sheets and engineering specifications. Each quotation received was then evaluated based on technical and commercial conformance, leading to the recommendation of a single equipment supplier. Each vendor was also asked to provide quotations for indirect costs associated with each piece of equipment including freight, operational spares and on-site vendor support.

Pricing for minor equipment that was not issued to vendors for quotation was based on Ausenco’s current database of costs.

The site field program included early engagement of local contractors in the regions spanning from New Liskeard to Sudbury. The engagement was to gauge interest in the project and assess each contractor’s ability to deliver on each respective scope of work, as well as to tour their facilities and fabrication shops. These visits formed the basis of the distribution list for budgetary quotes for installation. The request for budgetary quotation was accompanied by a scope of work that included preliminary design information, including drawings, equipment lists and MTOs. The schedules of rates for each contractor were compared and evaluated, and then benchmarked against Ausenco’ current database of rates before a single contractor was recommended for each discipline. Each contractor was asked to provide quotations for the indirect costs associated with the delivery of each scope of work, including mobilisation/de-mobilisation costs, temporary construction facilities, mobile equipment and non-labour supervision.

Capital costs were developed using the methodology above and categorised based on the project’s WBS.

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The project implementation approach is based on an EPCM model. The EPCM costs were built up by developing a staffing plan for each respective service and applied across the project duration.

8.4.1 Quantities

Quantity information was derived from the following sources:

• Feasibility study engineering quantities derived from concept or preliminary engineering • Estimated quantities derived from sketches, information from equipment vendors or information of previous or similar project designs • Allowances or factored quantities derived from percentages applied as a factor based on experience • Material unit rates • Current budget pricing, factoring and historical data was used: o Earthworks and civil works rates were based on local contractor rates. o Structural steel supply rates were based on the supply of workshop drawings, fabrication, surface treatment and delivery to site. o Platework unit rates were based rates from suppliers for steel platework and non- steel platework. Prices include the supply of workshop drawings, fabrication, installation of linings (where required) surface treatment and delivery to site. o Mechanical equipment costs were based on costs from multiple specialist suppliers. For select minor equipment, in-house database costs were used. o New and replaced piping was based on preliminary MTOs for large bore piping and factored for small bore piping, and quoted piping supply costs. Fittings, valves and supports were factored off the total installed mechanical equipment costs and benchmarked. o Major electrical and instrumentation equipment costs were priced from multiple suppliers. For select minor equipment, in-house database information was used. o Electrical and instrument bulks were priced on MTOs and factors. • No growth allowances were applied.

The degree of budget pricing, factoring and historical data is summarised in Table 8-3.

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Table 8-3. Type of Estimating per Discipline

Preliminary Study Engineering & Estimated % Allowances or Cost Category Priced Items (%) (Historical Pricing) Factored (%) Earthworks 100 - - Concrete 100 - - Structural Steel 100 - - Architectural 81 19 - Mechanical 96 4 - Piping - - 100 Electrical 81 10 9 Instrumentation 86 11 3 Indirects 94 - 6 Owner’s Costs 45 40 15

8.4.2 Labour Rates

The preferred contractor list was developed during the feasibility study and consisted of local contractors that were contacted and/or visited as part of the early contractor engagement strategy. The list contained multiple contractors for each disciplinary scope of work, and each was requested to provide a proposal that included a schedule of rates. These quoted schedules of rates were based on scopes of work that included preliminary design information including drawings, equipment lists, and MTOs. The rates for each contractor were evaluated against each other and benchmarked against the Ausenco database of rates before a single contractor was recommended for each scope of work.

8.5 Site Construction Hours

8.5.1 Labour hours

The proposals that were submitted by the preferred contractors also included unit labour hours for installation. These estimates were based on preliminary design information including drawings, MTOs, and preliminary equipment data. The unit labour-hours for each contractor were evaluated against each other and benchmarked against the Ausenco database of standard unit labour-hours to install each unit of commodity/bulk material/equipment before a single contractor was recommended for each scope of work.

8.5.2 Work Week

At this stage of the project, it was assumed that the on-site work schedule for the project will be a 60-hour work week. It is expected that most of the contractor labour workforce will be local and will travel to and from the project location daily. For the EPCM and contractor workforce that do not reside in the local area, a three-weeks-on/one-week-off rotational schedule will be adopted.

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8.5.3 Field Indirects

Field indirect costs are for items that are not directly attributable to the construction of specific physical facilities of the refinery but are required to be provided during the construction period to support construction. They include, but are not limited to, items such as:

• temporary generators • fuel • construction site office trailers, lunchroom trailers, and portable ablution • telephone services, including cost of service for telephone • site-specific inductions • site safety consumables • demurrage • temporary fencing • rental vehicles • mobile equipment rentals

The indirect costs for the contractors were based on the direct quotes within each proposal that was received. These costs were evaluated and benchmarked against Ausenco’s database of costs.

Many of the items listed above were required for the field inspection program completed during the feasibility study. The indirect costs for the EPCM team were built out using these quotes for local contractors and businesses that provided equipment and services that were utilised during the field inspection program. The remainder of the costs were estimated using Ausenco’s database of costs.

8.6 Freight Cost & Duties

All materials, plant and equipment items within the direct costs category are assumed to be free- on-truck (FOT) at the supplier’s premises or delivered to site. Freight costs were provided in the vendor quotes or factored from the direct supply cost and included for each line item.

Freight costs are deemed to include inland transportation, export packing, forwarder costs, ocean freight, air freight, insurance, receiving port custom agent fees, local inland freight to the project, and custom duties.

Ausenco will develop a logistics plan prior to project execution to determine the appropriate means of freight movement, and to provide freight and handling costs for the capital cost estimate. This will include a review of site access and recommendations for project implementation.

8.7 Construction Accommodation & Meals

The execution strategy is to utilise local contractors from the bordering communities of New Liskeard to reduce accommodation and per diem costs. For construction management and

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contractors that are required to travel to the project site, accommodation and meals are included in the capital cost estimate based on house rentals in nearby towns and a daily cost for meals.

8.8 Spare Parts

Spare parts include:

• commissioning spares • operational spares for one year of operation

The request for budgetary quotation that was issued to each of the equipment suppliers included the request to provide quotations for commissioning and operational spares. When included, these costs were used to build out the cost estimate. Spare parts for the remaining equipment was calculated as a percentage of permanent equipment costs.

8.9 First Fills

First fills include the costs for the first fill of chemicals, reagents, fuels and lubricants required for each unit operation in the process. The quantities for each were calculated using preliminary design data including consumption rates estimated in the METSIM™ model, process design criteria, and the equipment sizing provided by the vendors.

The cost for each chemical, reagent, fuel or lubricant were based on supplier quotations. Multiple suppliers were approached for quotations for each reagent and were evaluated against each other and benchmarked against the Ausenco database of costs before a single supplier was recommended.

8.10 Vendor Support

It is expected that vendor support will be required for the construction and/or commissioning of the major equipment packages. Not only is this to support the execution of the project but is usually required to satisfy performance guarantee and warranty requirements from each vendor.

Allowances for vendor support, for both installation supervision and for the commissioning component, was included and based on the vendor-supplied rates in each major equipment package proposal.

8.11 EPCM

The Project Delivery Strategy is to execute this project on an EPCM basis. In this arrangement, the EPCM contractor will provide engineering, procurement, construction and commissioning management services on behalf of First Cobalt. The cost estimate was built from a dedicated staffing plan that was developed for each service and applied across the project life. The estimate was built to include the cost for labour and expenses for each of the following:

• engineering design • procurement • construction management

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• pre-commissioning • commissioning • sub-consultants • expenses

8.12 Third-Party Engineering Services, Testing & Inspection

Third-party services are included.

8.13 Owner's Costs

The capital cost estimate includes Owner’s costs, and covers the following:

• allowance for a small Owner’s team • site clean-up and minor demolition works • operational readiness (also known as pre-production costs)

As the project delivery strategy is assumed to be on an EPCM basis, an allowance is being carried for a small Owner’s Team that will work with the EPCM contractor to execute the project.

Although the design basis was to re-use as much of the existing equipment and infrastructure at the refinery, some demolition will be required. For equipment, steel, and bulk material removal, it is assumed that most of the cost is offset by credits the salvage contractor will receive for scrap metals. However, there is still a cost carried for demolition of items of little value, such as concrete foundations, as well as a cost allowance for general site clean-up prior to ramp-up mobilisation of the contractor workforce.

The Owner’s cost includes an allowance for operational readiness, which is the pre-production ramp-up of the operations workforce. This allowance was created to capitalise the cost to hire and employ key operations personnel before commissioning is complete in order to gain familiarity with the process, produce operations and maintenance manuals, and develop the processes and procedures for a seamless transition into an operational state.

Owner’s costs exclude the following and are not included in the capital cost estimate:

• Owner’s contingency for changes in scope or additional work • contract works insurances • loss of production and efficiency resulting from implementation • project taxes and permits • environmental approvals • cost of shutdowns • working capital • sunk capital

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8.14 Escalation

Escalation has not been included in the capital cost estimate.

8.15 Financing Costs

No allowance for financing costs or interest costs during construction has been included in the capital cost estimate.

8.16 Growth (Design Allowance)

No growth allowances have been included in direct costs.

8.17 Management Reserve

The capital cost estimate excludes any management reserve allowances.

8.18 Capital Estimate Contingency

The purpose of contingency is to provide for uncertain costs within the project scope. Contingencies do not include allowances for scope changes, escalation, or exchange rate fluctuations. It should be noted that contingency is not a function of estimate accuracy and should be measured against the project total that includes contingency.

Contingency has been applied to the estimate as a deterministic assessment by assessing the level of confidence on a discipline basis, taking into consideration scope definition, material/equipment supply pricing, and installation costs.

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9 Operating Cost

9.1 Summary

The operating cost estimate is presented in Q1 2020 US dollars (USD or US$). The estimate was developed to have an accuracy of ±15%. The estimate includes processing, general and administration (G&A), and effluent disposal costs.

The operating cost estimate for the average operating year is provided in Table 9-1. The average annual operating cost is $30.737 M, or $2.72/lb of produced cobalt.

Table 9-1. Average Annual Operating Cost Summary

Average Operating Unit Cost Item Cost (US$k/a) (US$/lb Co) Labour 2,795 0.25 Maintenance 942 0.08 General and Administration 1,420 0.13 Subtotal (Fixed Costs) 5,157 0.46 Power 2,211 0.20 Reagents and Operating Consumables 14,808 1.31 Lab and Assay Costs 117 0.01 Off-site Disposal 8,444 0.75 Subtotal (Variable Costs) 25,581 2.26 Total 30,737 2.72

9.2 Basis of Operating Cost

The operating cost estimate includes on-site costs from the receipt of cobalt hydroxide feed material and consumables through to product packaging and effluent discharge. The operating costs begin on the first day of refinery operation, after wet commissioning and feed commissioning. The refinery availability is based on 91.3% or 8,000 operating hours per year.

The scope of the operating costs includes the following:

• labour for operating, maintenance, and supervision directly associated with the refinery • fuels, reagents, consumables, and maintenance materials associated with operation of the refinery • fuels, lubricants, tires and maintenance materials used in operating and maintaining the refinery mobile equipment and light vehicles • lease and rental costs associated with mobile equipment and light vehicles • operating costs for the on-site laboratory • power supply costs

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• site G&A costs • management and off-site disposal costs for sodium sulphate

9.3 Labour

Labour costs for the facility were derived from references to “drive-in, drive-out” projects in Northern Ontario and are summarised in Table 9-2. The cost per employee is calculated from a base salary with an additional 35% for burdens including benefits, bonuses, overtime, and other costs. The number of staff required is based on a continuous operation, 24 hours per day. The maintenance philosophy is to prioritise activities during the day, with callouts as required during the nightshift. Operators will be expected to perform basic maintenance as necessary.

The labour cost comprises 8.6% of the total operating cost estimate, or $0.23/lb of cobalt produced. G&A labour is captured separately; see Section 9.8 for details.

Table 9-2. Operations & Maintenance Roster

Roles per Rotation Total Role Shift Shifts (days on/off) Employees Upper Management Plant Manager 1 1 5/2 1 Plant Metallurgist 1 1 5/2 1 Maintenance Supervisor 1 1 5/2 1 Technical Services Assayer/Analysts 1 4 4/4 4 Environmental Technician 1 2 4/4 2 Refinery Operations Control Room Operator 1 4 4/4 4 SX Area Operators 1 4 4/4 4 Reagent Operator 1 1 5/2 1 Forklift/Product Handling Operator 1 2 4/4 2 Forklift/Feed Handling Operator 1 2 4/4 2 Crystalliser Operator 1 4 4/4 4 Dump Truck Operator 1 2 4/4 2 Refinery Maintenance Mill Wright / Fitter 1 4 4/4 4 Trades Assistants 1 4 4/4 4 Electrician 1 2 5/2 2 Instrument Tech 1 2 5/2 2 Total Processing Labour 16 40

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9.4 Maintenance

Annual maintenance consumable costs were calculated based on the direct mechanical capital cost by area using a weighted average factor of 4%. The maintenance factors were derived from recent estimates for hydrometallurgical plants with similar unit processes, and Ausenco’s benchmarks. Maintenance costs for mobile equipment and light vehicles were based on equipment utilisation and an hourly maintenance rate. Costs were also allocated to cover annual laboratory maintenance.

The total maintenance consumables operating cost is $0.07/lb of produced cobalt, equivalent to approximately 2.5% of the total operating cost.

9.5 Power

Process power draw was based on the average power utilisation of each motor on the electrical load list for the process plant and services. Power will be supplied by Hydro One to service the facilities at the site. Including sodium treatment, the estimated average running load is 2.5 MW, which comprises 7.2% of the total operating costs at $0.20/lb of cobalt produced. A summary of the power costs is presented in Table 9-3.

Table 9-3. Power Cost Summary

Area Average Operating Cost Unit Cost Number Area Description Load (kW) Power (MWh/a) (US$/a) (US$/lb Co) 0100 Site-wide General 216 1,728 188,514 0.02 1100 Feed Preparation 40 323 35,188 0.00 1200 Leaching & Neutralisation 244 1,952 212,906 0.02 1300 Solvent Extraction 236 1,890 206,208 0.02 1600 Crystallisation & Product Handling 508 4,064 443,362 0.04 1700 Tailings 1,009 8,076 880,997 0.08 1800 Reagents 128 1,020 111,322 0.01 1900 Site Services 152 1,218 132,918 0.01 Subtotal 1,614 12,913 1,408,674 0.12 1750 Sodium Treatment 920 7,358 802,793 0.07 Total Power 2,534 20,271 2,211,414 0.20

9.6 Reagents & Operating Consumables

Individual reagent consumption rates were estimated based on the metallurgical testwork results, Ausenco’s in house database, industry practice, and peer-reviewed literature. Reagent costs were obtained from budgetary quotations from reagent suppliers. Other consumables were estimated as follows:

• natural gas – estimated heating requirements and equipment consumption • diesel – mobile equipment utilisation and hourly consumption • filter cloths – estimated lifespan

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Reagents and consumables represent approximately 48% of the total plant operating costs at $1.31/lb of cobalt produced as summarised in Table 9-4.

Table 9-4. Reagents & Consumables Operating Costs by WBS Area

WBS Cost Proportion Unit Cost Area Description Number (US$k/a) (%) (US$/lb Co) 0100 Site-wide General 54 0 0.00 1200 Leaching & Neutralisation 1,917 13 0.17 1300 Solvent Extraction 11,526 78 1.02 1600 Crystallisation & Product Handling 565 4 0.05 1700 Tailings 665 4 0.06 3180 Mobile Equipment 82 1 0.01 Total 14,808 100 1.31

9.7 Laboratory & Assays

Laboratory and assay costs were derived from the expected number of samples required on a per shift, daily, weekly, and monthly basis. The costs include environmental sampling and assaying, operational assays, and assays to determine product quality. Costs were also allocated to cover quarterly audits of the assay lab. Unit costs per sample were derived from recent reference projects.

Laboratory and assay costs represent 0.4% of the annual operating costs, at $0.01/lb of cobalt produced.

9.8 General & Administrative

General and administrative (G&A) costs are expenses not directly related to the production of cobalt sulphate. These costs were developed from Ausenco’s in-house data on existing Canadian operations. The G&A costs include:

• site services – site maintenance and access road maintenance • G&A labour – as summarised in Table 9-5 • human resources – recruiting, training, medicals and inductions, community relations • site administration – advertising, stationary, light freight, office equipment, garbage disposal • health and safety – safety supplies and PPE, risk assessments • environmental reporting – monitoring and reporting • IT and telecommunications – hardware, communications, ERP systems • contract services – equipment rentals, sanitation and cleaning services • insurance – damage, breakdown, and business interruption insurance • financial costs – accounting and other expenses

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Table 9-5. G&A Labour Roles

Roles per Schedule No of Role Shifts Shift (days on/off) Employees Health & Safety & Operations Trainer 1 1 5/2 1 Human Resources Manager 1 1 5/2 1 Reception / Clerk 1 1 5/2 1 Security 1 2 4/4 2 Buyer 1 1 5/2 1 Total Administration Labour 5 6

The total G&A costs per category are summarised in Table 9-6.

Table 9-6. Annual G&A Costs

Annual Cost Description (US$/a) Site Services Maintenance 80,000 Personnel 361,920 Human Resources 125,000 Site Administration 24,000 Health and Safety 50,000 Environmental 59,000 IT & Telecommunications 80,000 Contract Services 47,000 Insurance 513,500 Financial Costs 80,000 Total 1,420,420

9.9 Sodium Management

Costs associated with sodium management were separated from the other areas and are presented in Table 9-7.

Table 9-7. Sodium Management Operating Costs

Average Operating Unit Cost Item Cost (US$k/a) (US$/lb Co) Labour 160 0.01 Maintenance 170 0.02 Subtotal (Fixed Costs) 330 0.03 Power 803 0.07 Off-site Disposal 8,444 0.75 Subtotal (Variable Costs) 9,247 0.82 Total 9,577 0.85

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Off-site disposal costs refer to process tailings that must be transported for off-site disposal. This specifically applies to sodium sulphate, which cannot be stored in the tailings facility due to its high solubility. The cost of disposal was developed on a per tonne basis and is derived from a recent budgetary quotation for the service.

The cost of off-site disposal of sodium sulphate is 27.5% of the total operating cost, or $0.75/lb Co. The all-in cost of sodium treatment is $0.85/lb Co.

9.10 Assumptions

The following assumptions were made in developing the cost estimate:

• Costs are based on Q1 2020 pricing without allowances for inflation. • For materials sourced in Canadian dollars, an exchange rate of 1.375 Canadian dollar per US dollar was used. • The annual power costs were calculated using a unit price of $0.11/kWh. Ausenco provided electrical load estimates to Hydro One to receive a quote based on the best information available. • An additional operating cost of $0.17/lb of produced cobalt is considered in the financial model for transportation charges for hydroxide purchases. • Labour is assumed be locally sourced from the Timiskaming District in Northern Ontario.

9.11 Exclusions

The following costs and scope are excluded from the operating cost estimate:

• off-site office labour costs and expenses • sustaining capital costs are included in the capital estimate • corporate overhead costs • contingency

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10 Economic Analysis

10.1 Cautionary Statement

The results of the economic analyses discussed in this chapter represent forward-looking information as defined under Canadian securities law. The results depend on inputs that are subject to a number of known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those presented herein. Forward-looking information includes the following:

• assumed commodity prices and exchange rates • proposed plant throughput • projected process recovery rates • sustaining costs and proposed operating costs • assumptions about closure costs and closure requirements • assumptions about environmental, permitting, and social risks

Additional risks to the forward-looking information include:

• changes to costs of production from what is assumed • unrecognised environmental risks • unanticipated reclamation expenses • unexpected variations in process throughput, grade or recovery rates • failure of plant, equipment or processes to operate as anticipated • changes to assumptions as to the availability of electrical power, and the power rates used in the operating cost estimates and financial analysis • ability to maintain the social licence to operate • accidents, labour disputes and other risks of the industry • changes to interest rates • changes to tax rates

Project years used in the financial analysis are provided for conceptual purposes only. Permits still must be obtained in support of operations, and approval to proceed is still required from First Cobalt’s Board of Directors.

10.2 Methodology Used

An economic model was developed to estimate annual pre-tax and post-tax cash flows and sensitivities of the project based on an 8% discount rate. It must be noted that tax estimates involve complex variables that can only be accurately calculated during operations and, as such, the after-tax results are approximations. A sensitivity analysis was performed to assess the impact of variations in metal prices, recovery, operating costs, capital costs and discount rate.

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The capital and operating cost estimates developed specifically for this project are presented in Chapter 8 of this report in 2020 US dollars. The economic analysis has been run on a constant dollar basis with no inflation.

10.3 Financial Model Parameters

A base case cobalt price of US$25/lb is based on the Benchmark Minerals Intelligence market evaluation. The forecasts are meant to reflect the average metal price expectation over the life of the project. No price inflation or escalation factors were considered. Commodity prices can be volatile, and there is the potential that actual prices may deviate from the forecast.

The economic analysis was performed using the following assumptions:

• use of project dates (i.e., Year -1, Year 1, Year 2) instead of calendar dates • construction starting January 1, Year -1 • construction period of 12 months • commercial production start-up on January 1, Year 1 • ramp-up period: o 50% of design production in January, Year 1 o 75% of design production in February, Year 1 o 100% of design production achieved in March, Year 1 • mine life of 11 years • exchange rate of 1.375 (CAD:USD) • 70% payability of cobalt contained to the feed provider • 100% payability of cobalt contained in the sale • grade in the feed of 30% Co • 93% overall recovery • freight cost of US$100/tonne of concentrate from Durban to Cobalt • cost estimates in constant Q1 2020 US dollars with no inflation or escalation • 100% ownership • capital costs funded with 100% equity (no financing costs assumed) • all cash flows discounted to beginning of Year -1 using end year discounting convention • cobalt is assumed to be sold in the same year it is produced

10.4 Taxes

The project has been evaluated on an after-tax basis to provide an approximate value of the potential economics. The tax model was compiled with assistance of First Cobalt. The calculations are based on the tax regime as of the date of the feasibility study.

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At the effective date of the cash flow, the project was assumed to be subject to the following tax regime:

• the Canadian corporate income tax system consisting of 26.5% total income tax • opening tax loss carry-forward balance of C$11.8 M • capital cost allowance rate of 25% • total tax payments are estimated to be US$91 M over the life of mine

10.5 Working Capital

Initial fills and operational readiness are included as part of initial capital. Additionally, a high- level estimation of working capital has been incorporated into the cash flow analysis based on Accounts Receivable (0 days), Inventories (30 days) and Accounts Payable (30 days).

10.6 Closure Costs & Salvage Value

The project’s closure cost has been estimated at $6 M and salvage cost is assumed to be 10% of initial capital expenditures (i.e., $6 M) and assumed to be incurred in the year after final production.

10.7 Economic Analysis

The economic analysis was performed assuming 8% discount rate. The pre-tax NPV discounted at 8% is US$192 M; the internal rate of return IRR is 64%; and the payback period is 1.6 years. On an after-tax basis, the NPV discounted at 8% is US$139 M; the IRR is 53%; and the payback period is 1.8 years. A summary of project economics is shown graphically in Figure 10-1 and listed in Table 10-1. Cash flow on an annualised basis is summarised in Table 10-2.

Figure 10-1. Projected Life-of-Mine Cash Flows

$60 $450

$40 $300

$20 $150

$0 $0 Y (-1) Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8 Y 9 Y 10 Y 11 Flow

-$20 -$150

Tax Unlevered Free Cash Flow Cash Free Unlevered Tax

- Tax Cumulative Unlevered Free Cash Cash Free Unlevered Cumulative Tax

-$40 -$300 -

Post Post -$60 -$450

Post-Tax Unlevered Free Cash Flow Post-Tax Cumulative Unlevered Free Cash Flow

Source: Ausenco 2020.

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Table 10-1. Summary of Project Economics

Parameter Unit LOM Total / Avg. General Cobalt Price US$/lb 25 Life of Project years 11 Cobalt Hydroxide Payability % 70 Production Mill Head Grade %Co 30.0 Mill Recovery Rate % 93.0 Total Cobalt Recovered klb 123,576 Total Average Annual Production klb 11,234 Operating Costs Processing Cost US$/lb Co 2.60 G&A Cost US$/lb Co 0.12 Total Operating Costs US$/lb Co 2.72 Transportation Cost US$/lb Co 0.17 Capital Costs Initial Capital US$M 56.0 Life-of-Project Sustaining Capital US$M 0.6 Salvage Value US$M 5.6 Closure Cost US$M 5.6 Financials Pre-Tax NPV (8%) US$M 192 IRR % 64 Payback years 1.6 NPV (8%) / Initial Capital : 3.4 Financials Post-Tax NPV (8%) US$M 139 IRR (%) % 53 Payback (years) years 1.8 NPV (8%) / Initial Capital : 2.5

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Table 10-2. Cash Flow Model

Free Cash Flow Valuation Inputs Units Total / Avg. Y (-1) Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8 Y 9 Y 10 Y 11 Y 12

Revenue US$mm $3,089 -- $265 $282 $282 $282 $282 $282 $282 $282 $282 $282 $282 -- Purchase of Feed US$mm ($2,325) -- ($199) ($213) ($213) ($213) ($213) ($213) ($213) ($213) ($213) ($213) ($213) -- Operating Expenses US$mm ($337) -- ($29) ($31) ($31) ($31) ($31) ($31) ($31) ($31) ($31) ($31) ($31) -- Transportation Cost US$mm ($21) -- ($2) ($2) ($2) ($2) ($2) ($2) ($2) ($2) ($2) ($2) ($2) -- EBITDA US$mm $407 -- $35 $37 $37 $37 $37 $37 $37 $37 $37 $37 $37 -- Initial Capex US$mm ($56) ($56) ------Sustaining Capex US$mm ($1) -- -- ($0) ------($0) ------Closure Capex US$mm ($6) ------($6) Salvage Value US$mm $6 ------$6 Change in Working Capital US$mm ------Pre-Tax Unlevered Free Cash Flow US$mm $350 ($56) $35 $37 $37 $37 $37 $37 $37 $37 $37 $37 $37 -- Pre-Tax Cumulative Unlevered Free Cash Flow US$mm ($56) ($21) $15 $53 $90 $127 $164 $201 $239 $276 $313 $350 $350

Unlevered Cash Taxes US$mm (91) -- ($3) ($7) ($8) ($8) ($9) ($9) ($9) ($9) ($9) ($10) ($10) -- Post-Tax Unlevered Free Cash Flow US$mm $259 ($56) $31 $30 $29 $29 $29 $28 $28 $28 $28 $28 $28 -- Post-Tax Cumulative Unlevered Free Cash Flow US$mm ($56) ($25) $5 $35 $64 $92 $120 $148 $176 $204 $232 $259 $259

Sensitized Sensitivity % Metric Pre-Tax Post-Tax NPV (8%) -- 8.0% US$mm $192 $139 IRR % 64.2% 53.0% Payback yrs 1.6 1.8

Macro Assumptions Sensitized Sensitivity Metric Cobalt Price – $25.00 US$/lb $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25

FX - CAD$:US$ – $1.38 CAD$:US$ $1.38 $1.38 $1.38 $1.38 $1.38 $1.38 $1.38 $1.38 $1.38 $1.38 $1.38 $1.38 $1.38 $1.38

Production

Hydroxide Circuit Restart Op Years Throughput Hydroxide Circuit 50.3 tpd tpa Y 1 11 200,907 -- 17,221 18,369 18,369 18,369 18,369 18,369 18,369 18,369 18,369 18,369 18,369 -- Cobalt Grade Hydroxide Circuit Sensitivity 30.0% % 30% -- 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% -- Cobalt Recovery Hydroxide Circuit – 93% % 93.0% -- 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% -- Cobalt Contained Hydroxide Circuit klb 132,877 -- 11,389 12,149 12,149 12,149 12,149 12,149 12,149 12,149 12,149 12,149 12,149 -- Tailings Production 19,139 dtpa dtpa 209,333 -- 17,943 19,139 19,139 19,139 19,139 19,139 19,139 19,139 19,139 19,139 19,139 --

Total Revenue US$mm $3,089 -- $265 $282 $282 $282 $282 $282 $282 $282 $282 $282 $282 --

Recovered Cobalt Hydroxide Circuit klb 123,576 -- 10,592 11,298 11,298 11,298 11,298 11,298 11,298 11,298 11,298 11,298 11,298 --

Cobalt Payable (Sale)

Cobalt Payable Hydroxide Circuit 100% % 100% – 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% – Revenue from Cobalt Hydroxide Circuit US$mm $3,089 -- $265 $282 $282 $282 $282 $282 $282 $282 $282 $282 $282 --

Purchase of feed US$mm $2,325 -- $199 $213 $213 $213 $213 $213 $213 $213 $213 $213 $213 --

Payability to Feed Provider

Payability Hydroxide Circuit 70% 70% – 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% – Purchase of Feed Cobalt Hydroxide Circuit US$mm $2,325 -- $199 $213 $213 $213 $213 $213 $213 $213 $213 $213 $213 --

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Operating Costs

Operating Costs Sensitivity Total Operating Costs – 2.72 US$/lb US$mm $337 -- $29 $31 $31 $31 $31 $31 $31 $31 $31 $31 $31 --

Labour - Fixed Cost 2.79 MUS$/a US$mm $31 -- $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 -- General Maintenance - Fixed Cost 0.94 MUS$/a US$mm $10 -- $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 -- General and Administration - Fixed Cost 1.42 MUS$/a US$mm $16 -- $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 -- Power - Variable Cost 0.20 US$/lb US$mm $24 -- $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 -- Reagents & Operating Consumables - Variable Cost 1.31 US$/lb US$mm $162 -- $14 $15 $15 $15 $15 $15 $15 $15 $15 $15 $15 -- Lab and Assay Costs - Variable Cost 0.01 US$/lb US$mm $1 -- $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -- Offsite Disposal - Variable Cost 0.75 US$/lb US$mm $92 -- $8 $8 $8 $8 $8 $8 $8 $8 $8 $8 $8 --

Transportation Cost US$mm $21 -- $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 --

Feed Mass tpa 200,907 -- 17,221 18,369 18,369 18,369 18,369 18,369 18,369 18,369 18,369 18,369 18,369 -- Cobalt Grade Product Sold 20.5% % 20.5% -- 20.5% 20.5% 20.5% 20.5% 20.5% 20.5% 20.5% 20.5% 20.5% 20.5% 20.5% -- Product Sold Mass tpa 273,429 -- 23,437 24,999 24,999 24,999 24,999 24,999 24,999 24,999 24,999 24,999 24,999 --

Purchase Feed Transport Cost 100 US$/t US$mm $20 -- $1.7 $1.8 $1.8 $1.8 $1.8 $1.8 $1.8 $1.8 $1.8 $1.8 $1.8 -- Product Sold Transport Cost 2 US$/t US$mm $1 -- $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 --

Capital Expenditures Sensitivity Total Initial Capital – US$mm $56 $56 ------

Direct Plant Cost US$mm $30 $30 ------Indirect Costs US$mm $9 $9 ------Owners Cost US$mm $1 $1 ------Contingency US$mm $4 $4 ------Tailings Storage Facility US$mm $1 $1 ------Sodium Removal US$mm $9 $9 ------Others US$mm $1 $1 ------Sensitivity Total Sustaining Capital – US$mm $1 -- -- $0 ------$0 ------

Tailings Dam US$mm $1 -- -- $0 ------$0 ------

Closure Capex US$mm $6 ------$6

Closure Cost 10% US$mm $6 ------$6

Salvage Value US$mm $6 ------$6

Salvage Value 10% US$mm $6 ------$6

Total Capital Expenditures Excluding Salvage Value US$mm $62 $56 -- $0 ------$0 ------$6

Working Capital

Beginning Net Working Capital Balance -- Final Year of Operations 11

Revenue US$mm $3,089 -- $265 $282 $282 $282 $282 $282 $282 $282 $282 $282 $282 -- Raw Material + Operating Expenses + G&A + Transportation US$mm $2,682 -- $230 $245 $245 $245 $245 $245 $245 $245 $245 $245 $245 -- Days % Accounts Receivable -- US$mm ------Inventory 30 8.2% US$mm $20 -- $19 $20 $20 $20 $20 $20 $20 $20 $20 $20 -- -- Accounts Payable 30 8.2% US$mm $20 -- $19 $20 $20 $20 $20 $20 $20 $20 $20 $20 -- -- Net Working Capital US$mm ------

Total Change in Net Working Capital US$mm ------

Taxes

Tax rate 26.5% % Revenue US$mm $3,089 -- $265 $282 $282 $282 $282 $282 $282 $282 $282 $282 $282 -- Raw Material + Operating Expenses + G&A + Transportation US$mm ($2,682) -- ($230) ($245) ($245) ($245) ($245) ($245) ($245) ($245) ($245) ($245) ($245) -- EBITDA US$mm $407 -- $35 $37 $37 $37 $37 $37 $37 $37 $37 $37 $37 -- CCA Claimed US$mm ($54) -- ($14) ($11) ($8) ($6) ($4) ($3) ($3) ($2) ($1) ($1) ($1) -- Taxable income (Before NCL) US$mm $353 -- $21 $27 $29 $31 $33 $34 $35 $35 $36 $36 $36 -- NCL Claim US$mm ($9) -- ($9) ------Taxable income US$mm $344 -- $12 $27 $29 $31 $33 $34 $35 $35 $36 $36 $36 -- Income taxes US$mm $91 -- $3 $7 $8 $8 $9 $9 $9 $9 $9 $10 $10 --

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10.8 Sensitivity Analysis

A sensitivity analysis was conducted on the base case pre-tax and after-tax NPV and IRR of the project, using the following variables: cobalt price, discount rate, foreign exchange rate, total capital costs, operating costs and overall recovery. Table 10-3 shows the project’s pre-tax sensitivity, and Table 10-4 shows the project’s post-tax sensitivity results. The results are based on single-factor sensitivities, thus inter-relationships between variables (such as hydroxide payability to the cobalt price) are not considered. The analysis revealed that the project is most sensitive to changes in cobalt prices.

Table 10-3. Pre-Tax Sensitivity Pre-Tax NPV Sensitivity to Discount Rate Pre-Tax IRR Sensitivity to Discount Rate

Cobalt Price (US$/lb) Cobalt Price (US$/lb)

$192 $15 $20 $25 $30 $35 64.2% $15 $20 $25 $30 $35 3.0% $28 $152 $277 $402 $526 3.0% 11.2% 39.4% 64.2% 88.2% 112.0% 5.0% $19 $129 $238 $348 $458 5.0% 11.2% 39.4% 64.2% 88.2% 112.0% 8.0% $8 $100 $192 $283 $375 8.0% 11.2% 39.4% 64.2% 88.2% 112.0%

10.0% $3 $85 $166 $248 $330 10.0% 11.2% 39.4% 64.2% 88.2% 112.0% Discount Rate Discount Discount Rate Discount 12.0% ($2) $72 $145 $218 $292 12.0% 11.2% 39.4% 64.2% 88.2% 112.0%

Pre-Tax NPV Sensitivity To FX Pre-Tax IRR Sensitivity To FX

Cobalt Price (US$/lb) Cobalt Price (US$/lb) $192 $15 $20 $25 $30 $35 64.2% $15 $20 $25 $30 $35

(20.0%) ($43) $49 $141 $232 $324 (20.0%) (10.4%) 22.2% 44.5% 65.2% 85.5%

(10.0%) ($14) $77 $169 $261 $352 (10.0%) 2.5% 31.3% 54.7% 77.1% 99.1% FX FX -- $8 $100 $192 $283 $375 -- 11.2% 39.4% 64.2% 88.2% 112.0% 10.0% $27 $118 $210 $302 $393 10.0% 18.2% 46.9% 73.1% 98.8% 124.3% 20.0% $42 $134 $226 $317 $409 20.0% 24.4% 53.9% 81.6% 108.8% 135.9%

Pre-Tax NPV Sensitivity to Opex Pre-Tax IRR Sensitivity to Opex

Cobalt Price (US$/lb) Cobalt Price (US$/lb)

$192 $15 $20 $25 $30 $35 64.2% $15 $20 $25 $30 $35

(20.0%) $49 $140 $232 $324 $415 (20.0%) 24.5% 50.5% 74.9% 98.8% 122.5% (10.0%) $29 $120 $212 $303 $395 (10.0%) 18.1% 45.0% 69.5% 93.5% 117.3%

-- $8 $100 $192 $283 $375 -- 11.2% 39.4% 64.2% 88.2% 112.0%

Opex Opex 10.0% ($12) $80 $171 $263 $355 10.0% 3.1% 33.7% 58.8% 82.9% 106.8% 20.0% ($32) $60 $151 $243 $334 20.0% (7.6%) 27.8% 53.4% 77.6% 101.5%

Pre-Tax NPV Sensitivity To Total Capex Pre-Tax IRR Sensitivity To Total Capex

Cobalt Price (US$/lb) Cobalt Price (US$/lb)

$192 $15 $20 $25 $30 $35 64.2% $15 $20 $25 $30 $35 (20.0%) $19 $110 $202 $294 $385 (20.0%) 16.5% 49.8% 80.2% 110.0% 139.6% (10.0%) $14 $105 $197 $288 $380 (10.0%) 13.6% 44.1% 71.3% 97.9% 124.3% -- $8 $100 $192 $283 $375 -- 11.2% 39.4% 64.2% 88.2% 112.0%

10.0% $3 $95 $186 $278 $370 10.0% 9.1% 35.5% 58.3% 80.3% 102.0% Total Total Capex Total Total Capex 20.0% ($2) $90 $181 $273 $364 20.0% 7.3% 32.2% 53.4% 73.6% 93.6%

Pre-Tax NPV Sensitivity to Recovery Pre-Tax IRR Sensitivity to Recovery

Cobalt Price (US$/lb) Cobalt Price (US$/lb)

$192 $15 $20 $25 $30 $35 64.2% $15 $20 $25 $30 $35

95% $29 $128 $228 $327 $427 95% 18.2% 47.2% 73.7% 99.7% 125.5% 94% $18 $114 $210 $305 $401 94% 14.8% 43.3% 69.0% 94.0% 118.8%

93% $8 $100 $192 $283 $375 93% 11.2% 39.4% 64.2% 88.2% 112.0% Recovery Recovery 92% ($2) $86 $173 $261 $349 92% 7.3% 35.4% 59.4% 82.5% 105.3% 91% ($12) $72 $155 $239 $323 91% 3.0% 31.4% 54.5% 76.7% 98.5%

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Table 10-4. Post-Tax Sensitivity Post-Tax NPV Sensitivity to Discount Rate Post-Tax IRR Sensitivity to Discount Rate

Cobalt Price (US$/lb) Cobalt Price (US$/lb)

$139 $15 $20 $25 $30 $35 53.0% $15 $20 $25 $30 $35 3.0% $20 $112 $204 $295 $387 3.0% 9.4% 33.3% 53.0% 71.5% 89.7% 5.0% $12 $94 $175 $255 $336 5.0% 9.4% 33.3% 53.0% 71.5% 89.7% 8.0% $4 $72 $139 $207 $274 8.0% 9.4% 33.3% 53.0% 71.5% 89.7%

10.0% ($1) $60 $120 $180 $240 10.0% 9.4% 33.3% 53.0% 71.5% 89.7% Discount Rate Discount Discount Rate Discount 12.0% ($5) $50 $104 $158 $212 12.0% 9.4% 33.3% 53.0% 71.5% 89.7%

Post-Tax NPV Sensitivity To FX Post-Tax IRR Sensitivity To FX

Cobalt Price (US$/lb) Cobalt Price (US$/lb) $139 $15 $20 $25 $30 $35 53.0% $15 $20 $25 $30 $35

(20.0%) ($43) $34 $102 $169 $236 (20.0%) (10.4%) 19.0% 37.5% 53.9% 69.5%

(10.0%) ($15) $55 $122 $190 $257 (10.0%) 2.1% 26.6% 45.5% 63.0% 79.9% FX FX -- $4 $72 $139 $207 $274 -- 9.4% 33.3% 53.0% 71.5% 89.7% 10.0% $18 $86 $153 $220 $288 10.0% 15.5% 39.3% 59.9% 79.6% 98.9% 20.0% $29 $97 $164 $232 $299 20.0% 20.8% 44.8% 66.4% 87.2% 107.6%

Post-Tax NPV Sensitivity To OPEX Post-Tax IRR Sensitivity To OPEX

Cobalt Price (US$/lb) Cobalt Price (US$/lb)

$139 $15 $20 $25 $30 $35 53.0% $15 $20 $25 $30 $35

(20.0%) $34 $102 $169 $236 $304 (20.0%) 20.9% 42.2% 61.3% 79.6% 97.6% (10.0%) $19 $87 $154 $221 $289 (10.0%) 15.4% 37.8% 57.1% 75.6% 93.7%

-- $4 $72 $139 $207 $274 -- 9.4% 33.3% 53.0% 71.5% 89.7%

Opex Opex 10.0% ($13) $57 $124 $192 $259 10.0% 2.6% 28.6% 48.8% 67.5% 85.7% 20.0% ($32) $42 $110 $177 $244 20.0% (7.6%) 23.7% 44.5% 63.4% 81.7%

Post-Tax NPV Sensitivity to Total CAPEX Post-Tax IRR Sensitivity to Total CAPEX

Cobalt Price (US$/lb) Cobalt Price (US$/lb)

$139 $15 $20 $25 $30 $35 53.0% $15 $20 $25 $30 $35 (20.0%) $12 $80 $148 $215 $282 (20.0%) 14.1% 42.0% 65.8% 88.6% 111.0% (10.0%) $8 $76 $143 $211 $278 (10.0%) 11.6% 37.2% 58.7% 79.2% 99.2% -- $4 $72 $139 $207 $274 -- 9.4% 33.3% 53.0% 71.5% 89.7%

10.0% ($1) $68 $135 $202 $270 10.0% 7.6% 30.0% 48.2% 65.3% 81.9% Total Total Capex Total Total Capex 20.0% ($6) $63 $131 $198 $265 20.0% 6.1% 27.2% 44.2% 60.0% 75.3%

Post-Tax NPV Sensitivity to Recovery Post-Tax IRR Sensitivity to Recovery

Cobalt Price (US$/lb) Cobalt Price (US$/lb)

$139 $15 $20 $25 $30 $35 53.0% $15 $20 $25 $30 $35

95% $19 $93 $166 $239 $312 95% 15.5% 39.6% 60.4% 80.3% 99.9% 94% $11 $82 $153 $223 $293 94% 12.5% 36.5% 56.7% 75.9% 94.8%

93% $4 $72 $139 $207 $274 93% 9.4% 33.3% 53.0% 71.5% 89.7% Recovery Recovery 92% ($4) $61 $126 $190 $255 92% 6.1% 30.0% 49.2% 67.1% 84.6% 91% ($13) $51 $113 $174 $236 91% 2.6% 26.6% 45.4% 62.7% 79.4%

Figure 10-2 shows the project’s pre-tax sensitivity results and Figure 10-3 shows the project’s post-tax sensitivity results.

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Figure 10-2. Pre-Tax Sensitivity

$300

$250

$200

$150 NPV MUSD$

$100

$50 -20% -15% -10% -5% 0% 5% 10% 15% 20%

Cobalt Price Exchange Rate Opex Total Capex

100%

90%

80%

70%

IRR 60%

50%

40%

30% -20% -15% -10% -5% 0% 5% 10% 15% 20%

Cobalt Price Exchange Rate Opex Total Capex

Source: Ausenco, 2020.

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Figure 10-3. Post-Tax Sensitivity

$230 $210 $190 $170 $150 $130

NPV MUSD$ $110 $90 $70 $50 -20% -15% -10% -5% 0% 5% 10% 15% 20%

Cobalt Price Exchange Rate Opex Total Capex

75% 70% 65% 60% 55%

IRR 50% 45% 40% 35% 30% -20% -15% -10% -5% 0% 5% 10% 15% 20%

Cobalt Price Exchange Rate Opex Total Capex

Source: Ausenco, 2020.

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11 Project Execution

11.1 Project Execution Plan

The Project Execution Plan (PEP) will address the overall project (objectives, scope, strategies and roles and responsibilities) and provide a comprehensive plan for its development and implementation. The PEP covers the plan for engineering, procurement, construction, start-up and of the project. It is estimated the project will be completed within 15 months of receiving the environmental permits and corporate approval to proceed.

11.1.1 Project Health, Safety & Security

The Project HSEC Management Plan will align the EPCM HSEC Management Systems with First Cobalt’s specific HSEC Management Systems, Policies, Plans and Procedures for the project. The HSEC Management Plan and associated contracts, legislation and codes of practice, identify and encompass the standards, working behaviours, and safe work practices that will be expected of all employees including contractors.

11.1.2 Engineering

The engineering team will deliver the basic and detailed design for the scope of facilities on the First Cobalt Refinery Project and provide deliverables and technical support to ensure the effective construction, commissioning, and operation of the facilities. An Engineering Management Plan will be developed that will detail the methodology, processes, and standards for the delivery of the engineering requirements of the project.

11.1.3 Construction

The EPCM contractor will provide construction management supervision of the contractors. This will include coordination, monitoring and direction of contractors to ensure compliance with safety, health and environment standards, plus the administration of contract requirements for quality, schedule, documentation, industrial relations requirements, etc.

Prior to mobilisation, key members of the construction team will support the project through early involvement in activities such as the following:

• reviewing engineering deliverables from a constructability perspective • participation in developing a detailed execution schedule and budget • participating in the final evaluation and award of purchasing packages and construction contracts

11.1.4 Site Establishment

First Cobalt have previously utilized the services of local businesses and contractors for temporary site services such as:

• temporary power • mobile equipment

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• fuel • office trailers and ablution • waste removal services • PPE, electrical bulks and misc. construction supplies

It is expected that these suppliers/contractors will be utilized by the EPCM contractor to establish the site and continue to provide services throughout the duration of the project.

The First Cobalt Refinery contains existing facilities such as offices, washrooms and showers. Priority will be given to re-establish and upgrade these existing facilities to allow use for the duration of the project. This will also include connecting a temporary power generator and upgrades to the HVAC, communications and septic systems.

Each contractor will be designated a laydown area prior to mobilisation to site, illustrated by a construction layout drawing that will be included in the contract formation documentation. Each contractor will be responsible for establishing their own temporary site offices for the duration of their contract. Upon completion of their specific construction activities, each contractor will demobilise all temporary facilities and clean their designated areas.

11.1.5 Commissioning & Handover

Commissioning covers the handover and acceptance of process equipment and commissioning modules between the various commissioning stages, from the completion of installation by contractors and suppliers through verification of plant and equipment dry or pre-commissioning by field engineers and design engineers, to final commissioning by the commissioning team.

11.1.6 Project Schedule

The preliminary project execution schedule is shown in Figure 11-1. First Cobalt will provide overall leadership to make key project decisions and manage community, environmental, permitting, local authorities and security, whilst the EPCM contractor will provide engineering, procurement, management and execution personnel that are experienced in cost-effective project delivery in accordance with both Canadian and provincial design standards. The following assumptions were made to develop the schedule:

• working calendars used in the project schedule represent a five-day work week for engineering; a 60-hour work week for construction; and a five-day work week for fabrication, delivery, and start-up activities • required permits are obtained prior to the start of construction and commissioning • the duration of activities is estimated based on similar historical projects and the judgment of the project team • the fabrication and delivery times of equipment packages are based on information provided from the vendors during the feasibility study • construction work will continue throughout the winter months, but an attempt to limit, civil earthworks, etc., to non-winter work will be undertaken • the schedule is logically driven with as few constraints as possible

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Figure 11-1. Preliminary Execution Schedule

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12 Interpretation and Conclusions

Metallurgical testwork programmes and process modelling demonstrated that cobalt sulphate meeting battery grade specifications at 20.8% w/w cobalt could be produced from the cobalt hydroxide feed material. The subsequent process design also determined that large portions of the existing process equipment and infrastructure can be incorporated in the revised design. Additional buildings and areas are required to fully support the refinery at the expanded throughput.

Following completion of the process model, the requirement for sodium treatment was identified based on a review of published literature and verified with toxicity testwork. A treatment system was included in the process design, and costs estimates were developed for off-site disposal.

The overall financial analysis of this feasibility study demonstrates that the project has positive economics, and it is recommended to continue developing the project to early works in support of subsequent detailed engineering.

12.1 Metallurgical Testing

Metallurgical testing demonstrated that cobalt sulphate meeting battery grade specifications at 20.8% w/w cobalt could be produced from the cobalt hydroxide feed material.

Hydroxide re-leach tests in the 17070-01 program showed that 97% of the cobalt was extracted at a temperature of 55°C and pH 1.5 resulting in a PLS grade of 15 g/L cobalt. With similar conditions in the 17070-03 program, cobalt extraction was about 93% with PLS grades of about 12 g/L. A PLS solution grade of 20 g/L was selected for the design. Sulphuric acid and limestone consumptions in leaching and neutralisation were 748 kg/t and 161 kg/t, respectively.

The recommended configuration of the ISX circuit for a 20 g/L cobalt PLS based on the Solvay modelling was:

• organic extractant concentration: D2EHPA at 20% by volume • configuration: 3 extraction stages; 2 scrubbing stages; 2 stripping stages • total number of stages = 7 • extraction advance O/A: 0.57 • extraction pH profile: E1 = 2.3; E2 = 2.7; E3 = 2.8 • scrubbing advance O/A: 10 • scrubbing pH profile: Sc1 = 2.4; Sc2 = 1.8 • stripping pH profile: S1 = 1.7; S2 = 1.5

ISX testwork also identified that gypsum would precipitate in the ISX stripping stages. This led to including gypsum cooling towers in the design and increasing ISX strip liquor flowrates.

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CoSX modelling performed by Solvay identified the following parameters for the process:

• organic extractant concentration: Cyanex 272 at 40% by volume • configuration: 3 extraction stages; 6 scrubbing stages; 1 or 2 stripping stages • total number of Stages s 10 or 11 • extraction advance O/A: 1.0 • extraction pH profile: E1 = 4.3; E2 = 4.4; E3 = 5.1 • scrubbing advance O/A: 10 • scrubbing pH profile: Sc1 = 4.0 to Sc6 = 3.5 • stripping advance O/A: 12

Toxicity testwork determined that sodium concentrations above 2,231 mg/L are acutely toxic to daphnia magna. Based on the results of the testwork, it was determined that the concentration of sodium in the effluent would be maintained below 2,000 mg/L in the design.

The effluent treatment testwork determined that a pH of 11 would be required to precipitate soluble metals and meet effluent discharge requirements.

12.2 Recovery Methods & Refinery Design

The process plant design is based on a combination of metallurgical testwork, process modelling, First Cobalt’s specifications, data from other consultants and equipment vendors, applicable regulations, and in-house information. The design considers the expansion of the existing refinery, and therefore the flowsheet has been designed to utilise the existing equipment and plant layout where applicable.

The proposed flowsheet is comprised of the following circuits

• feed preparation and re-pulping of cobalt hydroxide material • atmospheric leaching with sulphuric acid • neutralisation with limestone followed by cyclone classification, gypsum removal, thickening, and vacuum filtration • ISX, including extraction raffinate filtration and crud treatment • CoSX, including extraction raffinate and strip liquor filtration, and crud treatment • crystallisation, centrifuging, drying, and product bagging • sodium treatment, which includes evaporation and crystallisation • effluent treatment with lime followed by clarification and filtration prior to discharging into Lake Timiskaming

The objective of the layout design for the refinery was to minimise the requirement for additional footprint and new buildings. This was achieved by re-using the existing buildings, and where possible, the existing process equipment. A field investigation was conducted in Q3 2019 to

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evaluate the condition and characteristics of the existing infrastructure to inform the layout design.

Major equipment and infrastructure re-used in the proposed process design are as follows:

• all buildings, including the refinery, warehouse, and Merrill-Crowe building (now the leaching area) • freshwater pipeline • power line and substation • ancillary facilities such as the septic field, laboratory, and offices (provision has been made for their refurbishment) • tanks meeting residence time and materials of compatibility requirements • effluent clarifier (now the iron residue thickener) and two existing thickeners

Due to the increase in throughput and feed cobalt content relative to the historical operation, the following new areas are required to support the proposed process:

• solvent extraction building • sodium treatment building • crystalliser building • vacuum filtration building • effluent treatment area • neutralisation area

To accommodate the revised layout design, equipment and infrastructure—such as the existing ball mill, batch autoclave, and feed conveyor—must be removed.

12.3 Relevant Results of Environmental Studies, Permitting & Community Impact

The level of knowledge available through the existing environmental baseline studies provides a strong base to support new and amended environmental approvals for expansion of the CCR. Supplementary studies are underway to provide additional and current environmental baseline information. Given, the existing level of environmental knowledge for the area, there is a high level of confidence that the approval processes for the amended ECAs and the PTTW will be straightforward.

The following summarises the review of the environmental studies, permits, community engagement, and ongoing activities:

• Overall, most of the existing environmental permits/approvals will require amendment for the facility expansion. The existing environmental database and ongoing monitoring programs, along with ongoing supplementary baseline studies, will support the ECA amendments.

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• The existing Air and Noise ECA will require amendment to account for the increased production rate and the associated increase in atmospheric emissions. Noise studies near the CCR and along the proposed haul route to support the Air and Noise ECA amendment have been completed. The collected data will be used to complete a Noise Impact Assessment, which will support the amendment to the existing Air and Noise ECA. The emissions from the expansion will have to be quantified and modelled and this information will be consolidated into an updated Emissions Summary and Dispersion Modelling Report, which will also support the amendment to the existing Air and Noise ECA. Based on the air emissions predicted to be present from this facility, the approval of the amendment to the Air and Noise ECA should be straightforward. • The existing ISW ECA will need to be amended to account for the increased production rate, treatment process, expanded facilities for tailings and water management, and discharge of industrial sewage to Lake Timiskaming. An Assimilative Capacity Study will be required to support this amendment. The proposed discharge represents a very small contribution to Lake Timiskaming—approximately 0.01% of the estimated 7Q20 low flow within the lake. A bathymetric study and identification of sensitive fish habitat may be required for the discharge location within Lake Timiskaming. Based on the significant assimilative capacity of Lake Timiskaming, it is not anticipated that this discharge will have any impact on the lake and the discharge should be readily approved. • Historical surface water and groundwater quality data exist, and baseline surface water and groundwater data collection continues. These data will support the ISW ECA Amendment. The surface water quality results for nearby surface waters of Slate Creek, Farr Creek, and Lake Timiskaming are similar to those obtained in other area waterbodies. With regard to groundwater, two monitoring wells downgradient of the autoclave pond have had cobalt concentrations above the Ontario Groundwater Standards (Table 9, non-potable water within 30 metres of a surface water body). The source of the cobalt was determined to be a seep from the upgradient autoclave pond that has been repaired. Therefore, it is expected that cobalt concentrations in these monitoring wells will decline over time. • The PTTW application, submitted to MECP in March 2020, is expected to be approved. The maximum water taking from Lake Timiskaming to support the expanded 50 t/d facility operation represents 0.019% of the 7Q20 low flow in Lake Timiskaming. As a result, the impact upon the lake will be negligible. • A completed terrestrial natural heritage assessment did not identify any significant wildlife habitat or natural heritage features in the area proposed for expanded facilities. Should any of the existing refinery structures be proposed for removal as part of the expansion, a targeted Species at Risk survey would need to be completed to identify if bats or barn swallows are using the structures as habitat. • Federal or provincial environmental assessments are not required for the expansion of CCR. • The existing permit for the facility domestic septic system is believed to be adequate and will not require amendment. • First Cobalt and CCRL have established positive working relationships with local municipalities and Indigenous communities. These communities have been kept regularly informed of area activities, including the refinery expansion, and the communities have been supportive of this project. CCRL is committed to continuing their engagement and consultation activities with stakeholders and Indigenous communities.

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12.4 Opportunities and Risks

Throughout the development of the feasibility study, several project opportunities and risks have been identified that are material to the project outcomes. A hazard and operability study (HAZOP) is recommended to be completed once detailed engineering commences.

12.4.1 Opportunities • A two-stage neutralisation could reduce cobalt losses and improve the overall plant recovery. • Utilisation of rail infrastructure for the transport of reagents could lower costs, as there is a nearby rail line operated by Ontario Northland. • Further investigation into sodium management technologies such as electrodialysis or salt splitting may reduce off-site disposal costs. • Continuous pilot plant testing would confirm the performance of the proposed SX circuit. • The life of project supported by the TSF may be extended from 11 to 17 years based on revised reagent consumptions and tailings generation.

12.4.2 Risks • No hydroxide handling test work has been completed, and it is proposed that this work be undertaken prior to completing detailed design. • The variability of the feed cobalt hydroxide is unknown. Highly variable feed material may impact plant operations. • The feasibility study has assumed the cobalt hydroxide is received in bulk bags. If the feed material is delivered in alternative forms, there is a potential impact on the feed preparation area. • Impurities in the reagents may affect product quality. • The logistics of receiving reagents, feed material, and shipment of product has not been assessed and may impact the cost of receiving materials and exporting product.

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13 Recommendations

The financial analysis of this feasibility study demonstrates that the First Cobalt Refinery Project has robust economics, and that it is recommended to continue developing the project.

13.1 Ongoing Environmental, Permitting & Community Engagement Work

Listed below is a summary of the recommended work moving forward regarding environmental baseline studies, permitting, and community engagement:

• continue with the surface water and groundwater baseline data collection programs to support the required permitting and approvals processes • complete the Noise Impact Assessment and Emission Summary and Dispersion Modelling Report to support the amendment to the Air and Noise ECA • complete the Lake Timiskaming Assimilative Capacity Study for the discharge of the effluent from the expanded refinery to support the amendment to the ISW ECA • expand the groundwater monitoring network in the vicinity of the proposed TSF • prepare a Closure Plan amendment and provide the necessary additional financial assurance to reflect the additional rehabilitation activities • continue with regular consultation and engagement with stakeholders and Indigenous communities

13.2 Refinery Design

13.2.1 Continuous Pilot Plant

It is recommended to complete an SX pilot plant testwork program to confirm the Solvay modelling and to further inform the full-scale plant design.

13.2.2 Additional Testwork

From the recommended pilot plant, representative samples can be generated that can be used to inform the design of the following:

• Vendor testwork: allows vendors to confirm their sizing and offer performance guarantees. Applicable packages include: o iron residue thickener o vacuum filters o cobalt crystallisation o sodium treatment

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13.2.3 Sodium Management

Given the cost of off-site disposal, further evaluation of technologies applicable to sodium management is recommended. Alternative technologies may include:

• electrodialysis and salt splitting • ammonia based solvent extraction, resulting in production of a by-product such as ammonium sulphate

13.3 Early Works

Pending project approval, the early works listed in the subsections below are recommended to de-risk the project schedule.

13.3.1 Vendor Engagement for Long-Lead Packages

Early engagement of vendors for long-lead packages are recommended. This involves requesting additional vendor information and carrying out advance initial procurement tasks to ensure the execution schedule is maintained.

The equipment packages below are considered long lead, because of the following delivery times:

• solvent extraction • cobalt crystalliser • polishing filters • sodium treatment

13.3.2 Site Investigations

The site work listed below is recommended to de-risk future detailed engineering activities and execution planning.

• Geotechnical and structural site investigation: o define foundation requirements for new site buildings o manage a geotechnical contractor to perform on-site works o define requirements for expansion of the site access road o re-stabilisation of the fresh water pumphouse, including site visit with a potential contractor o structural investigation of the mezzanine level in the existing refinery to ensure adequacy for the revised process design o assess the Merrill-Crowe building – this area was restricted during the initial site visit due to the presence of cyanide and will need to be assessed for re-use in the design • 3D laser scan: Perform a scan of the existing facility to further inform aspects of detailed design such as piping, layout, and platework and reduce conflicts with existing equipment during installation.

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14 References

ASARCO. (2016): Commissioning of Innovative and Fully Automated GEA Westfalia Three- Phase Crud-treatment Decanter at Asarco Silver Bell Mine. SME.

Fire and Safety Systems 2020. First Cobalt Refinery Restart Project: Design Criteria for Fire Services. Prepared for: Ausenco Engineering Canada.

Hirsi T., Salonen P., Vaarno J. (2013): Outotec cooling towers provide cooling efficiency and low emissions in gypsum removal in SX plants. The South African Institute of Mining and Metallurgy, Base Metals Conference.

Jansen, M., Taylor A. (2005): Design of Copper SX Plants to Minimize Static and Other Fire Risks in the Light of Recent Industry Fires.

Jeffers, T., Harvey M. (1985): Cobalt Recovery from Copper Leach Solutions. United States Department of the Interior, Bureau of Mines Report of Investigations.

Knight Piésold Ltd. 2020. First Cobalt Refinery: Feasibility Level Design for Area 1 Tailings Storage Facility. Prepared for: Ausenco Engineering Canada.

Natural Resources Canada (NRC), (2015): National Building Code of Canada seismic hazard values. Retrieved from: http://www.earthquakescanada.nrcan.gc.ca/hazard- alea/interpolat/calc-en.php (accessed February 21, 2020).

Ontario Ministry of Natural Resources (OMNR), (2011): Classification and Inflow Design Flood Criteria. Technical Bulletin. August.

Ontario Provincial Standard Specification, (2013): Material Specifications for Aggregates - Base, Subbase, Select Subgrade, and Backfill Material. April. OPS. PROV 1010.

van Rooyen J., Archer S., Fox M. (2016): Manganese Removal from Cobalt Solutions with Dilute Sulphur Dioxide Gas Mixtures. The South African Institute of Mining and Metallurgy, The Fourth Southern African Conference on Base Metals.

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