Trump's Tariff Threats Boost Urgency for Domestic Critical Minerals

Report Highlights

• Bismuth prices are up 567% in the past two months, driven by China’s export restrictions on critical metals, including bismuth, in response to new tariffs introduced by Trump.
• FT’s plan involves building a mine and concentrator in the NWT, and converting a former steel fabrication plant in Alberta into a hydrometallurgical refinery, capable of producing cobalt sulphates, gold doré, bismuth ingots, and copper.
• The company’s collaboration with Rio Tinto (NYSE: RIO) has confirmed the feasibility of processing materials from RIO’s Kennecott operations in Utah at FT’s proposed refinery site in Alberta. Management is also in discussions with other companies interested in recovering cobalt and bismuth from residues.
• FT's immediate goals include finalizing the refinery plant site purchase, completing an updated Feasibility Study (FS), and permitting.
• While Trump’s tariff threats have raised uncertainties, we anticipate growing demand for critical metal sources in North America to reduce reliance on China. Battery/EV manufacturers/miners are actively seeking stable/long-term supply sources.

Price Performance (1-year)

FT's Target Metals: A Brief Overview

Positive near-term outlook boosted by U.S. tariffs on Chinese imports, and elevated geopolitical/trade risks

Gold: 

• Prices are near record highs driven by investor sentiment seeking safe-haven assets during times of economic and political uncertainty.
• We have a positive near-term outlook supported by escalating geopolitical and trade war risks.

Cobalt: 

• Prices are up 56% in the past month, to US$15/lb. 
• The surge follows the DRC's decision to halt cobalt exports for at least four months to address surplus supply and support prices. The DRC, which accounts for 70% of global mine production, plans to impose export quotas on cobalt, and collaborate with Indonesia, another key producer, to manage pricing and supply.
• Current prices are close to the 10-year average of US$17/lb. 
• China produces over 75% of global refined cobalt, with its cobalt exports to the U.S. subject to a 25% tariff.
• While the market is expected to remain in surplus over the next two to three years, leading to soft prices, we remain optimistic about the long-term outlook due to strong EV demand. While Trump’s policy changes, and reduced incentives, are impacting near-term EV prospects in the U.S., global EV sales growth remains robust, with forecasts of 15–20% in 2025 vs 25% in 2024. 

Bismuth: 

• Prices have surged 567% in the past two months (US$6/lb to US$40/lb) following China's export restrictions, raising supply concerns 
• Bismuth, recognized as a critical mineral due to its distinctive physical and chemical characteristics, plays a vital role in various industrial, environmental, and defense sectors.
• China controls over 80% of the global refined bismuth supply.
• In February 2025, China imposed export restrictions on five critical minerals, including bismuth, in response to new import tariffs introduced by Trump on Chinese goods.
• While we expect prices to moderate as trade tensions ease, we are raising our long-term price forecast by 10% to reflect recent developments

NICO Cobalt-Gold-Bismuth-Copper Project

$140M invested to date. Located 160 km northwest of Yellowknife, and 50 km north of Whati. Existing infrastructure includes access to hydro dams, an electric grid within 22 km, the Tlicho highway to Whati (97 km), and a new rail terminal 400 km from the project

Concentrates can be transported by truck/rail to the prospective refinery site in Alberta. The largest primary cobalt deposit in North America

 In addition, the deposit hosts 1.1 Moz gold. NICO’s bismuth deposit accounts for 12% of global reserves

FT has an option to purchase a former steel fabrication plant in Lamont county, Alberta, for $6M, with plans to convert it into a hydrometallurgical facility.

A 77-acre land package located 30 km northeast of Edmonton, and 15 km from Sherritt’s (TSX: S) nickel-cobalt processing plant. We believe the site’s location is ideal, offering close proximity to a rail line and key resources such as water, natural gas, power, sulfuric acid, and other reagents

A 2014 FS returned an AT-NPV7% of $224M, using US$16/lb cobalt vs the current spot price of US$15/lb, and the 10-year average price of US$17/lb. The potential open-pit measures 1.35 km long x 0.45 km wide x 0.22 km deep

Multiple catalysts

We anticipate that the upcoming updated Feasibility Study (FS) will present notably revised project parameters, such as a more optimized production profile, and updated OPEX and CAPEX, compared to the previous FS. The following points outline some of the key anticipated changes:

• Potential for CAPEX reductions, primarily driven by the new Tlicho highway, and the proposed brownfield refinery site in Alberta.
• Potential for increased early-stage cash flows due to an optimized mine plan prioritizing higher-grade ore in the initial years, a refined geological block model reducing dilution, and improved recovery rates. Additionally, processing materials from Rio Tinto's Kennecott operations in Utah, at the proposed refinery site in Alberta, will boost early cash flows. FT and Rio Tinto have already confirmed the feasibility of recovering cobalt and bismuth from Rio Tinto’s smelter waste.

FT's immediate goals include project financing, finalizing the refinery plant site purchase, completing an updated FS, and permitting for the construction and operation of the NICO mine and concentrator in the NWT, and the refinery plant in Alberta.

Financials

At the end of Q3- 2024, FT had $10M in debentures/loans from a long-term shareholder. Additionally, the company has a $10M  convertible debt financing available, with $3M withdrawn so far

As mentioned earlier, FT also has funding commitments totaling ~$17M from the U.S Department of Defense, and the Government 

FRC Valuation 

Our DCF valuation increased from $0.35 to $0.42/share, mainly because we have increased our long-term gold price forecast from US$1,600 to US$2,000/oz since our last report

Given the recent developments, we have revised our long-term pricing for cobalt and bismuth by applying a 10% premium to the historic averages used in our previous models

Our valuation is highly sensitive to commodity prices

We are reiterating our BUY rating, and revising our fair value estimate from $0.35 to $0.42/share. We believe the NICO project is positioned as a critical player in North America's supply of cobalt and bismuth, supported by funding commitments from the U.S. Department of Defense, and the Canadian government. Given the significant rise in geopolitical and trade risks, we expect a  surge in demand for domestic sources of critical metals. Upcoming catalysts include the acquisition of the refinery site, updates on project financing, and an updated Feasibility Study (FS).

Risks

We believe the company is exposed to the following key risks (not exhaustive):

Maintaining our risk rating of 5

• Project financing 
• Commodity prices
• Leveraged balance sheet
• Access to capital and share dilution
• Delays in project development