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*See important disclosures at the bottom of this report rating and risk definitions. All figures in US$ unless otherwise specified.
FT has secured non-dilutive funding totaling $16.2M from the U.S. Department of Defense, and the Government of Canada. Additionally, FT has secured convertible securities funding of up to $10M from an institutional investor. The company has already received an initial drawdown of $1.2M from the convertible securities facility. Proceeds were used to make a down payment towards the previously announced acquisition of a brownfield refinery site in Alberta, valued at $5.5M. FT’s plan involves converting a former steel fabrication plant into a hydrometallurgical refinery, capable of producing cobalt sulphates, gold doré, bismuth ingots, and copper.
Location Map
Source: Company
Secures financings for up to $26M
Located 160 km northwest of Yellowknife, and 50 km north of Whati
Concentrates can be transported by truck/rail to the prospective refinery site in Alberta
The potential open-pit measures 1.35 km long x 0.45 km wide x 0.22 km deep
A 2014 FS returned an AT-NPV7% of $254M, using US$16/lb cobalt vs the current spot price of US$12/lb, and the three-year average price of US$20/lb
Mineral Reserves
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; bismuth is used in alloys, pharmaceuticals, and chemicals
Planned Alberta Refinery Site
Source: Company
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 as it is in close proximity to a rail line, and various sources of water, natural gas, power, sulphuric acid, and reagents
FT's immediate goals include finalizing work for a project finance decision, including metallurgical testing, permitting for the construction and operation of the NICO mine and concentrator in the NWT, and the refinery in AB, and completing an updated FS.
Financials
Source: FRC/Company
At the end of Q1-2024, FT had $9.5M in debentures/loans from a long-term shareholder, maturing on or before December 31, 2024
Management is actively pursuing financing solutions to either repay or refinance this debt
In-the-money options/warrants can bring in $4.32M
FRC Valuation
Source: FRC
As a result of the recent financings, our DCF valuation increased from $0.31 to $0.35/share
Source: FRC
We are reiterating our BUY rating, and revising our fair value estimate from $0.31 to $0.35/share. Upcoming catalysts include acquisition of the refinery site, updates on the collaboration with Rio Tinto, as well as positive sentiment towards EV-metal juniors. We view the government grants as a strong vote of confidence in NICO, likely sparking interest among potential M&A/financing partners.
Risks
We believe the company is exposed to the following key risks (not exhaustive):
