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Independent Reviews for Venture Investors

FCC.V - Cooling down?

First Cobalt Corp. (FCC.V) aims to be the first vertically integrated cobalt company in North America. FCC.V controls over 10,000 hectares of prospective land, including a mineral processing facilities in the Cobalt Camp in Ontario, Canada. The refinery is the only permitted facility in North America capable of producing cobalt battery materials. With the recent acquisition of USCO.V, FCC.V is adding to its assets a quality advanced property.

The last seven months have been very busy for FCC.V, it acquired a total of three companies: Cobalt One, Cobalt Tech, and recently USCO.V. Cobalt price are up 33% but FCC.V is virtually flat for that period. However, FCC.V did have some strong price movement closing at $0.65 cents (November 8) and reached a 52 week high of $1.65 (November 27). FCC.V has traded over $1.00 for roughly six months of the seven month period. Note that since mid March Cobalt price have cooled down and seem to be consolidating which can also potentially affecting current FCC.V price (USCO.V acquisition aside).

Looking back 10 years shows a similar rise in Cobalt price prior to 2008, when the price peaked above $50 USD/lb. Assuming future economic downturn, (let's say in 2-3 years), the price of Cobalt could also take another sharp turn. However, what's different this time is that commitments have been made by large companies (Volkswagen, Apple) to source Cobalt in a responsible manner which have no doubt have had an effect on sentiments.

Chart suggest that the acquisition of Cobalt One and CobalTech along with the rising price of cobalt were very strong catalyst for the share price. The $30.6 M financing and the development of both Cobalt North and South Camp, including seven news release on sample results in three months (late November to February) kept the stock over $1.10 for the most part during this period.

Despite the new drilling, surveys. USCO.V acquisition. and the metallurgy, FCC.V's stock price began to decline in late March shortly after the filling for 43-101 (Cobalt Camp). Possible reasons for the decline are two folds: 1) The price spread between USCO.V and FCC.V was thin even after the acquisition, premium for USCO.V was 1 to 1.5 shares (see below). 2) the market realize that USCO.V is itself not 43-101 compliant yet.

Despite three additional sample results in three weeks, FCC.V's price continue to drop. Since April 16th, FCC.V is trading into a narrow range. The eight press releases issued (including USCO.V closure) have had little impact on the stock price. Comparing the last 6 weeks (L6) with the last 3 weeks (L3) transactions reveals that TD and Instinet are top net buyers in both period. TD % Buy rate has gone up (50%) in the last three weeks. On the sell side, Anonymous accounts for 20% of all net sell overall but has gone up to 24% in the last three weeks. Both CIBC and National Bank have augmented their sell activity as well. However, Canaccord a net buyer overall has switched to a net seller in the last three weeks, and vice versa with BMO. Engineered?

No doubt it is difficult to separate the USCO.V acquisition with the current FCC.V price. However, looking at the Cobalt ecosystem, a declining trend is resonating with CPO.V, CUZ.V, RNX.TO, BANC.V, CLQ.TO, LIC.V and CBLT.V. However, ECS.V is stable and SBW.V, and CCW.V on the rise of late.

Should the trajectory of the price of Cobalt soften in the near term, this might put pressure on all cobalt players, including FCC.V, whose major accomplishment are in the rear view mirror. FCC.V will have a full plate working on getting Iron Creek 43-101 compliant. Also do remember that not too long ago USCO.V also was trading at $0.50 cents (December 30th) and 0.65 cents (February 7th). Iron Creek is also a capital extensive operations; USCO.V raised $8M dollars since last October. This may also be a factor in the short term as FCC.V has three major projects and a refinery effort to support.

However, we do believe that FCC.V is positioned to be a major player in the space with a target price depending on Cobalt prices. While, the current levels are attractive for entry, one need to keep in mind possible headwinds. As we know, sentiment can change rather quickly on the Venture.

One last thing, market data starts to show that more work (volume) is required to keep FCC.V's stock price at these levels. FCC.V is cooling down?

Perhaps it is. We've been wrong before but time will certainly tell.

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.


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