Initiation of Coverage First Cobalt Corp. · Canaccord Genuity is the global capital markets group...

First Cobalt Corp.

Specialty Minerals and Metals

Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)The recommendations and opinions expressed in this research report accurately reflect the research analyst's personal, independent and objective views about any and allthe companies and securities that are the subject of this report discussed herein.

Canadian Equity Research18 September 2018

SPECULATIVE BUYPRICE TARGET C$0.70Price (17-Sep)Ticker

C$0.35 ; A$0.38FCC-TSX

52-Week Range (C$): 0.26 - 1.65Avg Daily Vol (M) : 0.5Enterprise Value (C$M): 86.8Cash (C$M): 19.8Long-Term Debt (C$M): 0.0NAV /Shr (C$): 0.67NAV /Shr (5%) (C$): 1.30P/NAV (x) (C$): 0.52Working Capital (C$M): 18.3

FYE Dec 2017A 2018E 2019EEBITDA (C$M) (10.1) (21.9) (22.1)Net Debt (Cash) (C$M) (29) (32) (9)

QuarterlyEBITDA

Q1 Q2 Q3 Q4

2017A (1.5) (1.6) (2.1) (4.9)2018E (3.2)A (5.8)A (6.4) (6.4)2019E (5.5) (5.5) (5.6) (5.7)

Quarterly NetDebt (Cash)

Q1 Q2 Q3 Q4

2017A (5) (4) (3) (29)2018E (25)A (19)A (13) (32)2019E (26) (21) (15) (9)

1.8

1.6

1.4

1.2

1

0.8

0.6

0.4

0.2

Oct

-17

No

v-1

7

De

c-1

7

Jan

-18

Feb

-18

Ma

r-1

8

Ap

r-1

8

Ma

y-1

8

Jun

-18

Jul-

18

Au

g-1

8

Se

p-1

8

FCCGlobal X Lithium & Bat tery Tech ETF (rebased)

Source: FactSet

Priced as of close of business 17 September 2018

Eric Zaunscherb, CFA | Analyst | Canaccord Genuity Corp. (Canada) | [email protected] | 1.416.869.7299Reg Spencer | Analyst | Canaccord Genuity (Australia) Ltd. | [email protected] | +61.2.9263.2701Allison Carson | Associate | Canaccord Genuity Corp. (Canada) | [email protected] | 1.416.869.7285

Initiation of Coverage

Seeking the Holy GrailInvestment recommendationWe are initiating coverage of First Cobalt with a conservative C$0.70 target price. The80% projected return justifies a SPECULATIVE BUY rating reflecting the company’sreliance on capital markets to advance as an exploration and development company. Weconsider finding primary cobalt production outside of the high-risk Democratic Republicof Congo, with upcoming elections and rising export taxes, one of the Holy Grails of thelithium ion battery supply chain. First Cobalt may garner positive market attention as itsexploration and development projects in Ontario and Idaho are advanced and de-risked.

Investment highlightsCobalt (-8%) and cobalt equities (-31% on an EV/t basis) have pulled back strongly thisyear on bearish sentiment related to changes in Chinese electric vehicle incentivesand increased supply from the Democratic Republic of Congo (DRC), exacerbated bya thin spot market. This, in our view, may be an important investment opportunity. Wemaintain a constructive outlook on cobalt, focusing on 2025e 14% electric vehicle salespenetration with strong support from energy storage systems growth. Increased batterymanufacture capacity and battery materials supply growth are required. The industry’sreliance on cobalt supplies from the DRC makes it vulnerable.First Cobalt has built an excellent project portfolio through the 2017 and 2018 roll-upof several cobalt explorers. This portfolio includes 1) almost one-half of the area of thevenerable Cobalt, Ontario mining camp, 2) a fully-permitted cobalt refinery in that camp,and 3) the highly prospective Iron Creek cobalt exploration project in the Idaho CobaltBelt. In our view, all three projects offer the potential to grow significantly in value as theyare advanced while also subject to re-rating as they are de-risked.Potential share price catalysts include an initial resource estimate and metallurgicalstudies for Iron Creek, a recommissioning study for the Cobalt refinery, and ongoing drillresults from both. Sources of risk include cobalt pricing and technical assumptions inadvance of the company’s delivery of technical reports.We believe First Cobalt has the experienced management and board of directorsnecessary to advance the company’s projects, as well as the financial means to takethese projects through 2019. We have modeled a $25 million raise at a discount tomarket ($0.35/sh) in order to fund the company’s needs beyond 2019. At current levels,First Cobalt’s share price implies a US$15/lb cobalt price, as compared to the currentUS$28/lb spot price and our long-term deck at US$49/lb. This highlights the valuationproposition inherent in the recent cobalt and battery materials theme pullback.

ValuationWe value First Cobalt’s assets on a spot cobalt basis, currently US$28/lb. Our valuationyields a project NAV of $251 million or $0.59/sh. We add net corporate adjustments of$34 million or $0.08/sh with 422 million shares outstanding. We apply a 1.0x multipleto the corporate NAVPS of $0.67 to yield our target NAVPS of $0.67, which supports arounded target price of C$0.70.

For important information, please see the Important Disclosures beginning on page 36 of this document.

2

Table of Contents

Table of Contents ....................................................................................................... 2

Seeking the Holy Grail ................................................................................................ 4

Investment thesis ............................................................................................................ 4

The company ................................................................................................................... 6

Iron Creek emerges as First Cobalt’s marquee project ................................................ 6

The Cobalt, Ontario, exploration proposition ...............................................................10

The cobalt production pathway in Ontario ..................................................................15

Model and valuation ..................................................................................................... 16

Potential catalysts and risks to our target price .......................................................... 20

Scenario analysis .......................................................................................................... 21

Corporate structure ....................................................................................................... 23

Appendix A – Directors and key management.......................................................... 24

Appendix B – The cobalt market .............................................................................. 26

What is cobalt? .............................................................................................................. 26

Global supply – DRC dominates supply ....................................................................... 26

A precarious balance .................................................................................................... 27

Appendix C – Cobalt, Ontario .................................................................................... 30

History ............................................................................................................................ 30

Geologic Setting ............................................................................................................ 32

Appendix D – The Idaho Cobalt Belt, Idaho .............................................................. 34

History ............................................................................................................................ 34

Geologic Setting ............................................................................................................ 34

First Cobalt Corp.Initiation of Coverage

Speculative Buy Target Price C$0.70 | 18 September 2018 Specialty Minerals and Metals 2

3

Figure 1: First Cobalt Corp. - Investment summary

Source: FactSet, Company Reports, Canaccord Genuity estimates

Rated: SPEC BUY Target Price: $0.70

Current Price: $0.35 Projected Return: 100.0%

52-Wk Range: $1.65/$0.26 Basic Shares (M): 339.2

ADV (30-day): 530,663 Market Cap (C$M): $118.7

Ent. Value (C$M): $86.8

Eric Zaunscherb, CFA | Analyst

[email protected] 416.869.7299

Reg Spencer | Analyst

[email protected] +61.2.9263.2701

Allison Carson | Associate

[email protected] 416.869.7285

Company Summary Major Shareholders

Jason Bontempo 0.6%

Robert Cross 0.5%

Paloduro Investments 0.5%

Trent Mell (CEO) 0.5%

Paul Matysek 0.4%

Source: FactSet

Financial Summary

(Year Ended 31 December) 2017A 2018E 2019E

Balance Statement (C$M)

Working Capital $27.8 $31.6 $9.7

Conceptual Resource Summary Net Debt (Cash) -$29.0 -$31.9 -$9.5

Enterprise Value $89.7 $86.8 $109.2

Mass Grade Contained Income Statement

(Mt) Co (%) Co (t) Exploration & Evaluation $1.7 $12.0 $12.0

Cobalt, Ontario 32.9 0.14% 45,492 EPS -$0.20 -$0.07 -$0.05

Iron Creek, Idaho 8.7 0.30% 26,100 EV / EBITDA -8.9x -4.0x -4.9x

Total Conceptual 41.6 0.17% 71,592 Cash F low Statement

Cash Flow, Operating -$8.3 -$23.6 -$22.4

Cash Flow, Investing -$0.2 -$0.2 $0.0

FCC Peers D Cash Flow, Financing $37.8 $26.5 $0.0

EV/t Co (Global, $) $1,212 $2,964 -59% Equity FCF $29.9 $5.2 -$22.4

Equity FCF / share $0.14 $0.01 -$0.05

P/CF 2.6x 27.9x -6.5x

Target NAVPS Sensitivities NAV & Target Generation

Project NAV (C$M) (C$/sh)

Cobalt conceptual vein resources $134.8 $0.32

Cobalt processing facility $65.1 $0.15

Iron Creek project $50.5 $0.12

Project NAV $251 $0.59

Corporate Adjustments:

Equity Raised (@ $0.32/sh) $25.0 $0.06

Working Capital $18.3 $0.04

G&A -$9.5 -$0.02

Long-term Liabilities -$0.8 $0.00

ITM Warrants & Options $1.3 $0.00

Corporate Adjustments $34.3 $0.08

Corporate NAV $285 $0.67

Shares (M, Fully Funded) 422

Target Generation:

Corporate NAVPS $0.67

Multiple 1.0x

Target NAVPS $0.67

Target Price (Rounded) $0.70

Projected Return 100.0%

Implied Spot Cobalt Price at Current Share Price $15.27

First Cobalt Corp. (FCC : TSX) September 17, 2018

First Cobalt is an exploration company with a dominant land position in the historic Cobalt Ontario

mining camp. Early mining was focused on prolific high grade silver veins, which were often

associated with high-grade cobalt mineralization. During 2017 First Cobalt completed a 3 way

merger with Cobalt One and CobalTech to achieve camp dominance. Historically, silver and cobalt

rich veins were found at surface and mined out to a maximum depth of ~150m. The company is

looking to test for the potential of low-grade, broad scale mineralization or "disseminated" cobalt

beyond the previously mined high-grade veins. During 2018, First Cobalt also acquired US Cobalt

and its prospective Iron Creek cobat project in Idaho.Active drilling is expanding known

mineralization and we await an initial resource estimate.

$14.23 $21.35 $28.46 $35.58 $42.69

62.4 $0.41 $0.63 $0.84 $1.05 $1.25

52.0 $0.37 $0.57 $0.76 $0.95 $1.14

41.6 $0.32 $0.51 $0.67 $0.84 $1.01

31.2 $0.27 $0.44 $0.58 $0.72 $0.87

20.8 $0.23 $0.36 $0.48 $0.59 $0.71

Cobalt (US$/lb)

Co

ncep

tual

(Mt

Co

)

$14.23 $21.35 $28.46 $35.58 $42.69

$0.53 $0.34 $0.54 $0.72 $0.90 $1.08

$0.44 $0.34 $0.53 $0.70 $0.87 $1.05

$0.35 $0.32 $0.51 $0.67 $0.84 $1.01

$0.26 $0.30 $0.48 $0.63 $0.79 $0.95

$0.18 $0.27 $0.43 $0.57 $0.71 $0.85

Cobalt (US$/lb)

Issu

e P

rice

(C$/s

h)



4

Seeking the Holy Grail

Investment thesis

We are initiating coverage of First Cobalt with a conservative C$0.70 rounded target

price. The 100% projected return justifies a SPECULATIVE BUY rating, which also

reflects the company’s reliance on capital markets to advance as an exploration and

development company. From our perspective, finding a profitable primary producer of

cobalt (97% of production is secondary) situated in a low sovereign risk jurisdiction is

one of the Holy Grails of the lithium ion battery supply chain. The cobalt supply chain

is dominated by the Democratic Republic of Congo (DRC), which is particularly

vulnerable with upcoming presidential elections and a postulated export tax.

Unfortunately, the pipeline of primary cobalt producers outside of the high-risk DRC is

very, very narrow. Consequently, we assert that First Cobalt deserves investment

consideration as it advances and de-risks its strong portfolio of exploration and

development cobalt projects. We base this assertion on the following points:

Positive cobalt outlook – There has been a powerful correction in battery materials

and related equities through 2017. This correction was related to weakening theme

sentiment on misunderstood changes to Chinese electric vehicle (EV) subsidies and

over-exaggerated over-supply concerns, all exacerbated by an equity market focus on

thin, largely unrepresentative metal indices. Despite the correction, Canaccord

Genuity maintains a very constructive outlook. We focus on 2025e 14% electric

vehicle sales penetration with strong support from energy storage systems growth,

both demanding increased battery manufacture capacity and growth in battery

materials supplies including cobalt. The forecast EV sales penetration corresponds to

a 25% CAGR of cobalt use in battery chemicals, taking overall cobalt demand growth

from 112kt in 2017 to a 2025f of 215kt. The industry’s reliance on cobalt supplies

from the high-risk Democratic Republic of Congo is increasing, not decreasing, with

negative implications for supply chain and reputational risk.

Exposure to value accretion through advancement and de-risking – First Cobalt owns

three strong projects in the form of a highly prospective cobalt exploration project in

the Idaho Cobalt Belt, vein resources in the Cobalt mining camp in Ontario, and a fully

permitted cobalt refinery in the same camp. In our view, all three projects offer the

potential to grow significantly in scale from our current combined conceptual estimate

of 72kt cobalt contained and value as they are advanced, while also being subject to

re-rating as they are de-risked. Conceptual resources estimated on drilling to date,

based on estimated volumes and weighted average grades, are open-ended in scale

to date. Our scenario analysis suggests the potential for a bull case target NAVPS of

C$1.25, 258% above the current share price level.

Ability to tread water – At 30 June 2018, First Cobalt had $18 million in working

capital and no debt. This is sufficient to fund its programs through 2019. We have

modeled an opportunistic $25 million raise at $0.32/sh (a discount to market) over

the next few months to fund advanced programs beyond 2019. Valuation is sensitive

to issue price: a 25% reduction in issue price reduces target NAVPS to $0.63 while a

25% increase in issue price increases target NAVPS to $0.70 (Figure 1).

We are initiating coverage of First

Cobalt with a conservative C$0.70

rounded target price. The 80%

projected return justifies a

SPECULATIVE BUY rating.



5

Attractive valuation – The recent pullback in battery material prices and sentiment

has created an excellent opportunity for gaining or regaining exposure. Since the

beginning of the year, cobalt has pulled back 8% while the mean enterprise value per

tonne cobalt (global in situ) of equities we follow has pulled back 31%. At present,

First Cobalt is trading at US$1,212/t Co in situ as compared to the US$2,964/t mean

of peers, a 59% discount. The current share price also implies valuation at a

US$15/lb cobalt spot price as compared to the current US$28/lb spot price and our

long-term deck at US$49/lb.

Experienced management and board – First Cobalt’s CEO, Trent Mell, is an

experienced mining industry executive with broad experience in both mining

management and capital markets. At Barrick Gold (ABX:TSX: $13.50 | Rated HOLD by

Carey MacRury) he served as Corporate Counsel and at Sherritt International (S:TSX:

$0.82 | Not rated) he served as an Associate General Counsel and Assistant

Secretary. He is strongly supported by his adept management team and practiced

board of directors. Chairman of the Board is Paul Matysek, who has made a career of

successfully building and selling companies. Matysek was recently Chairman of

Lithium X Energy, which was sold to Nextview New Energy Lion Hong Kong for $265

million. He was President and CEO of Goldrock Mines which sold to Fortuna Silver

Mines (FVI:TSX: $5.74 | Rated BUY by Dalton Baretto) for $178 million in July 2016.

He also served as CEO of Potash One, which was acquired by K+S Ag for $434 million

in a friendly takeover in 2011. Mr. Matysek was also the founder and CEO of Energy

Metals Corporation, a uranium company that grew from a market capitalization of $10

million to approximately $1.8 billion when sold in 2007.

Upcoming catalysts – Near term, First Cobalt expects to deliver on several milestones

that could be significantly catalytic to its share price. These include an initial resource

estimate and metallurgical studies for Iron Creek, a recommissioning study for the

Cobalt refinery, and ongoing drill results from the Cobalt camp and Iron Creek.

Potential risks – Aside from the usual risks associated with early-stage exploration

and development, we highlight the volatility of the cobalt market, the reliance on

capital markets and associated equity dilution, and the project assumptions made in

the absence of technical studies in our valuations. Our bear case scenarios target

NAVPS valuation of $0.21, or 39% down from the current share price level.



6

The company

First Cobalt owns a prospective exploration project in the Idaho Cobalt Belt in Idaho,

controls 11,700ha of exploration lands in the Cobalt, Ontario camp, and a fully

permitted refinery capable of producing cobalt material amenable to battery

production in the same camp. It emerged as a roll-up of several companies through

2017 (e.g. CobalTech Mining Inc. and Cobalt One Limited) and 2018 (US Cobalt Inc.),

with the goal to become the premier exploration and development vehicle globally for

exposure to cobalt. The focus on low-risk jurisdictions, Ontario and Idaho, was a key

attribute from conception.

We believe that the management team assembled around President and CEO Trent

Mell, and the Board of Directors overseeing that team, are highly experienced

(Appendix A) and more than capable of advancing First Cobalt’s mission and

maximizing shareholder value. They have been very successful in building the

company’s project portfolio and rapidly moving the company toward delivery of several

key milestones that may be catalytic to its share price. With $18 million in working

capital and no debt, the company is well-positioned to advance its projects to key

decision points, while its champions have the experience to tap capital markets

opportunistically over the next six to twelve months for future needs. We have

modeled a $25 million raise at a discount to market ($0.32/sh) to capture this next

level of dilution.

As outlined in Don’t feel too blue about cobalt (5 September) cobalt and cobalt

equities have suffered a significant correction through 2018 reflecting overall weak

risk-off markets, a relatively smooth expansion of production in the Democratic

Republic of Congo, and a softening in sentiment related to the battery theme, all

exacerbated by thin markets. We summarize our constructive view on the cobalt

market in Appendix B but highlight recent H1/18 electric vehicle sales figures for

China and Europe, which provide confirmation that EV sales penetration is growing

strongly. We forecast EV sales penetration of 14% globally by 2025, including global

EV sales of ~1.9 million units in 2018. This level of EV sales growth corresponds to a

25% CAGR of cobalt use in battery chemicals, taking overall cobalt demand growth

from 112kt in 2017 to a 2025f of 215kt. We expect a resumption in upward

momentum in the battery theme in general and cobalt specifically towards year-end

as one-time incentive plan shifts in China and global battery manufacturing

expansions with attendant stock builds are digested.

First Cobalt is an excellent representative for investment exposure at the exploration

and development end of the cobalt equity spectrum. It is listed on the TSX Venture

Exchange (FCC: TSXV), on the Australian Stock Exchange (FCC: ASX) and on the OTCQB

(FTSSF); trading on the TSX Venture is dominant at this time (Figure 2).

Iron Creek emerges as First Cobalt’s marquee project

Since the acquisition of US Cobalt in early 2018, Iron Creek has emerged as First

Cobalt’s marquee cobalt project. The project is situated on the Idaho Cobalt Belt

(Figure 3) as described in Appendix D and in the initiation of coverage report for

eCobalt Solutions (ECS: TSX: $0.79 | rated SPECULATIVE BUY), Cobalt: Out of the

shadows and into the spotlight, published 25 May 2017. eCobalt is advancing its

Idaho Cobalt Project also located on the Idaho Cobalt Belt.

In 2017, US Cobalt commenced a 40-hole drill program designed to validate and

expand upon a historic (1980) resource estimate amounting to 1.2Mt grading 0.59%

cobalt and 0.3% copper. The program covered a 460m strike length and generated

results that form the basis for an initial NI 43-101-compliant mineral resource

estimate expected by October this year.

We highlight recent H1/18 electric

vehicle sales figures for China and

Europe, which provide confirmation

that EV sales penetration is growing

strongly, and forecast EV sales

penetration of 14% globally by 2025.

Figure 2: Trading based on 30-day average

daily volume.

Source: FactSet, at 12 September 2018



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7

Figure 3: Idaho Cobalt Belt geology

Source: Company Reports

Figure 4: Underground drill hole traces in plan view showing bedrock geology, and the No Name

and Waite zones.




8

Figure 5: Recent results and cross-section showing underground drill intersections in the No Name and Waite zones.


First Cobalt recently acquired 100% ownership of Iron Creek for US$1.07 million,

which was previously leased, and eliminated the outstanding 4% royalty on the

project. The company intends to drill 30,000m in a $9 million, 3-rig, 90-hole program

at Iron Creek by Q4/18, which is designed to test extension of known mineralization

along strike, including broader intercepts of lower grade mineralization that were not

included in the historic resource estimate. Results of drilling to date, as shown in

Figure 4 and Figure 5, have extended the total mineralized strike length to 520

metres along the No Name and Waite zones. It is expected that the current drill

program will expand upon and upgrade the inferred resource estimate expected near-

term with the next resource estimate expected in early 2019.

Drilling to date, aided by underground access via three historic adits, is tracing the

roughly parallel No Name and Waite zones over 250m dip extensions. The zones dip

at approximately 75º to the north, which is a good orientation for underground mining.

True widths vary between 10 to 30m for each zone.

Drilling to date has extended the total

mineralized strike length to 520 metres

along the No Name and Waite zones

and further drilling will expand upon

and upgrade the inferred resource

estimate expected near-term.



9

Figure 6: Coloured backscatter images from electron microscopy show low Co pyrite in blue, high

Co pyrite in green, and Linnaeite (CoS) in red.


Most of the mineralization found on the Idaho Cobalt belt is cobalt-arsenic. At Iron

Creek, however, cobalt mineralization is found associated with pyrite, along with

chalcopyrite (a copper sulphide). Historic metallurgical studies for Iron Creek found

multiple phases of pyrite mineralization, only some of which also included cobalt.

Recent electron microscopy clearly shows two populations of pyrite, one with low

cobalt and one with high cobalt (). The metallurgical implications are unclear but

should be addressed in a report on metallurgical studies expected shortly.

We are following First Cobalt’s progress at Iron Creek closely. Based on results to date

(e.g. as included in Figure 5), we estimate a conceptual resource of ~8.7Mt grading

0.3% Co (26,100t Co contained) and 0.15% Cu. We crudely estimated the volume and

mass of the two known zones based on intercepted dimensions and applied the

weighted average grades of intersections to date. The conceptual grade exceeds the

0.22% average grade of cobalt deposits in our database by 36%. We do not expect the

upcoming initial resource estimate to measure up to our conceptual resource, given

that it is based on a snapshot of drill results several months old. We do, however,

expect the updated resource expected in early 2019 to closely approximate our

conceptual resource pending further results from the ongoing drill program.

Based on results to date, we estimate a

conceptual resource of ~8.7Mt grading

0.3% Co (26,100t Co contained) and

0.15% Cu.



10

Figure 7: First Cobalt land exposure in the Cobalt District, Ontario


The Cobalt, Ontario, exploration proposition

Over 2016 and 2017 First Cobalt, its predecessors and competitors built their

property portfolios in the prolific Cobalt, Ontario mining camp. As outlined in Appendix

C, mineralization including cobalt was first discovered in the region in 1884. The first

mine in the camp commenced operations in 1904 and produced mainly silver, almost

continuously, until 1989. Between 1909 and 1989 there were approximately 140

silver-cobalt mines in the camp. Over this period, official production amounted to

553,168,278 oz Ag, 24,685,219 lb Co, 3,624,546 lb Ni, and 2,625,714 lb Cu,

although actual production was likely higher.

First Cobalt’s land position covers ~45% of the Cobalt mining camp, incorporating

~11,700ha and 50 past producing mines, as depicted in Figure 7. Mining in the past

focused on narrow, high-grade silver veins typically mined from shallow open pits

(Figure 8, left) or underground mines less than 200m deep. Cobalt had little value

during this period and was viewed as waste. As a result, little exploration focused on

understanding controls on cobalt mineralization and many waste piles in the district

(Figure 8, right) could contain significant amounts of cobalt.

First Cobalt’s land position covers

~45% of the Cobalt mining camp,

incorporating ~11,700ha and 50 past

producing mines.



11

Figure 8: The past: historic open pit on narrow, high-grade silver vein (left), and waste or muck stockpile, likely containing cobalt (right).

Source: Canaccord Genuity

Figure 9: The future? Stockwork of cobalt-bearing mineralization.




12

First Cobalt’s first goal was to assemble the best portfolio of exploration lands in the

Cobalt camp and mount a sophisticated campaign of exploration to understand the

controls on cobalt mineralization. Although high-grade vein style mineralization was

the most obvious target, it was also believed that lower-grade style(s) of cobalt

mineralization could be identified, either as disseminated or stockwork mineralization

(Figure 9), that may be amenable to bulk mining methods. In addition, the company

set out to quantify the amount and grade of material, or muck, stockpiled around its

holdings with a view to early cashflow. Voluntary remediation programs for historic

mine areas are also ongoing.

First Cobalt commenced its exploration program in 2017, including regional mapping

and sampling with a view to understanding structures and deformation in the camp,

and how they might control mineralization. This work progressed to detailed mapping

and channel sampling, as well as geophysical and other surveying techniques.

Ultimately, First Cobalt drilled 61 shallow diamond drill holes in 2017 totalling

6,361.62m. Highlight intersections included:

Results from the Frontier mine included an intersection of 0.83% Co and 30

g/t Ag over 0.48 metres and 0.57% Co and 1.40% Ni over 0.40m in a new

cobalt-nickel vein found between the Woods and Watson veins.

Drilling in the Keeley South Zone intercepted cobalt in the Woods Vein as well

as two additional cobalt intercepts, the KeeleyCo#1 vein and the KeeleyCo#2

vein, indicating that several veins exist in this area. Assays included 15.7m of

0.12% Co, including 6.2m at 0.21% Co and 0.68% Co over 0.34m in the

Woods Vein and 1.15% Co over 0.42m in the KeeleyCo#1 vein and 0.60% Co

over 0.38m in the KeeleyCo#2 vein.

0.78% Co and 0.83% Ni over 2.0m, including 1.1m of 1.35% Co and 1.47%

Ni along the Bellellen Vein system.

In 2018, First Cobalt has budgeted for a $7 million exploration program focused on

near-surface cobalt mineralization potentially amenable to open pit mining. The

exploration model generated by First Cobalt’s geological team recognizes the camp’s

complexities with influences from the contact between two different ages and

competences of the host rock packages, the younger Nipissing diabase which

intruded both, and several episodes of structural deformation. The result is different

styles of mineralization at different sites throughout the camp (Figure 10).

Recent exploration has focused on the Kerr area, part of the Cobalt North package

(Figure 7 and Figure 11). First Cobalt has identified several mineralized horizons near

the historic Kerr Lake and Drummond Mines featuring multiple, closely-spaced cobalt-

silver veins hosted in sedimentary rocks. Highlight intersections include 6.5m grading

0.33% Co and 133 g/t Ag and 10.7m of 0.14% Co and 13.9 g/t Ag, including 6.9m of

0.21% Co and 12.5g/t Ag. Additional assays are pending, but it appears that two

parallel zones are being defined as outlined in Figure 12 separated by ~400m, one

hosting the former Kerr Lake and Drummond Mines and the more southerly hosting

the former Kerr #2 mine. Although continuity of cobalt mineralization has not been

demonstrated yet, the apparent strike lengths of the zones amount to 500m and

350m, respectively.

It is important to note that the Kerr area in Cobalt North contains several historic silver

mines, including Crown Reserve, Kerr Lake, Lawson, Drummond, Conisil and

Hargrave. The Kerr Lake Mine consisted of thirteen separate shafts with over 20km of

underground development. The Kerr Lake, Crown Reserve and Drummond Mines were

initially mined individually and later connected by underground workings for silver

exploration and drilling. This area produced over 50 million ounces silver and

900,000 pounds of cobalt, mainly between 1905 to 1950.

The exploration model generated by

First Cobalt’s geological team

recognizes the camp’s complexities

with multiple controlling influences on

mineralization.



13

Figure 10: Different styles of cobalt mineralization encountered to date in the Cobalt camp.


Figure 11: Bedrock geology and drill hole locations, Kerr Lake and Drummond area.




14

Figure 12: Geological block diagram of the Kerr Lake area and interpretation of cobalt-silver

mineralization distribution based on drilling and bedrock mapping.


Figure 13: Canaccord Genuity estimates of conceptual resources.

Source: Company Reports, Canaccord Genuity estimates

Although drilling by First Cobalt to date may not have delivered the “homerun”

intersections in the Cobalt camp sought by an impatient market, the fact that First

Cobalt’s exploration model is now delivering solid base hits is highly encouraging. It

must be stressed that the controls on mineralization in the camp are complex. We are

confident that First Cobalt will be able to identify and expand upon mineralization

potentially amenable to open pit mining. This confidence is based on the extent of the

mineral endowment in the Cobalt camp and historic operations that remain

undefined, as well as indications from geochemical surveying, prospecting and

surface sampling that have identified targets that remain to be fully tested.

In Figure 13 we summarize our estimates of conceptual resources (not NI 43-101) on

the project, amounting to over 45,000t of contained cobalt mineralization. We with

Mass Co Ag Cont'd

Deposit Category (Mt) (%) (g/t) Co (t)

Kerr-Drummond Conceptual 9.71 0.16% 42.2 15,097

Bellellen Conceptual 3.03 0.57% 23.7 17,232

Keeley-Frontier Conceptual 19.15 0.05% 18.9 9,787

Silver Banner Conceptual 1.01 0.33% 31.0 3,375

Total Conceptual 32.90 0.14% 30.9 45,492

Although drilling by First Cobalt to date

may not have delivered the “homerun”

intersections in the Cobalt camp sought

by an impatient market, First Cobalt’s

exploration model is now delivering

solid base hits.



15

Iron Creek, we crudely estimated the volume and mass of several known zones based

on intercepted dimensions and applied the weighted average grades of intersections

to date. While the overall conceptual grade does not exceed the 0.22% average grade

of cobalt deposits in our database, grades from individual zones do. We expect that

First Cobalt will focus on expanding those higher-grade targets, thereby bringing the

average grade up. We will monitor drill results as they are released in anticipation of

initial resource estimate(s), likely towards the end of 2019.

The cobalt production pathway in Ontario

Along with consolidation of a dominant land position in the Cobalt camp, First Cobalt

acquired two hard assets, the former Canadaka 100t/d mill, which is slated for

dismantling and sale for scrap, and a fully permitted cobalt-silver-nickel refinery

(Figure 14). The refinery is a key strategic asset. The hydrometallurgical facility was

commissioned in 1996, operated intermittently (and uneconomically) on a batch

basis, and has been on care and maintenance since 2015 (Figure 15). The facility sits

on a 16ha site expandable to ~50ha. It has been independently assigned (Hatch

2012) a replacement value of ~US$78 million before real estate, tailings

impoundment, permits and licences.

Figure 14: First Cobalt refinery exterior.




16

Figure 15: The refinery has been on care and maintenance since 2015 and appears to be in good

shape.


Bench-scale metallurgical studies have been ongoing, as has a recommissioning study

for the refinery, with results expected in October. First Cobalt has several options

ranging from restart at the current 24t/d capacity with minimal capex, to expansion to

accommodate larger flows of ore. Aside from its own studies of muckpile material, the

company announced in May a joint effort with Cobalt Power Group Inc. (TSX-V: CPO |

Not rated) as that company assessed its own muckpile inventory. In addition, First

Cobalt is evaluating third-party mine feed and battery material from recycling

companies. In sum, there are several opportunities for early cash flow, but the

upcoming recommissioning study should provide key details in assessing the value of

the refinery.

Model and valuation

We have focused on three primary assets in the valuation of First Cobalt, namely the

conceptual vein resources in the Cobalt camp, the Cobalt processing facility, and the

Iron Creek project in Idaho. We include nil value for potential muckpile processing or

the Canadaka mill.

As stated earlier, we are comfortable with a conceptual resource of 45,492t of

contained cobalt in several of the more advanced vein systems identified in First

Cobalt’s projects in the Cobalt camp. We anticipate initial resource estimate(s) later in

2019, as well as considerable growth potential beyond this. We track several

companies and how the market values their resources on an enterprise value per

tonne cobalt in situ basis (Figure 16). Global resources are currently valued at

US$2,275/t, although this figure varies considerably with the price of cobalt.

There are several opportunities for

early cash flow, but the upcoming

recommissioning study should provide

key details in assessing the value of the

refinery.



17

Figure 16: Mean cobalt in situ values on an enterprise value per tonne basis

Assuming 45,492t Co contained and the mean EV/t global of US$2,275 generates a

$135 million valuation for First Cobalt’s conceptual vein resources in the Cobalt

camp. This represents 54% of project NAV or 47% of our corporate NAV, as shown in

Figure 17.

The cobalt processing facility, or refinery, in the Cobalt camp has been valued at

~US$78 million replacement value before real estate, tailings impoundment, permits

and licences. Given the importance of permitted tailings impoundments and the

investments in time and funds to replicate them, we increase the replacement value

to US$100M. We expect publication of the recommissioning report near-term,

however, and do not know the extent of additional investment required to make it a

viable asset. For this reason, we apply a 0.5x factor to address financial and technical

risk to the restart to derive a weighted valuation of $65 million or 26% of project NAV

or 23% of corporate NAV.

The valuation of the Iron Creek project is more challenging, with neither resource nor

technical study to rely upon. We note that the Thackaringa project of Cobalt Blue

Holdings (COB: ASX: A$0.45 | Not rated) has metallurgical similarities to Iron Creek

and has been the subject of a pre-feasibility study released July 2018. The

Thackaringa flow sheet uses gravity separation to produce a pyrite concentrate,

pyrolysis (thermal decomposition) and magnetic separation to produce pyrrhotite,

leaching of the pyrrhotite to produce a solution containing cobalt, which is

subsequently precipitated as cobalt sulphate heptahydrate. We would add differential

flotation after gravity separation to isolate chalcopyrite and a circuit to recover a high-

grade copper concentrate. The key parameters of the Thackaringa and Iron Creek

projects are summarized in Figure 18. Capital and operating costs are adjusted to

reflect other comparable operations including eCobalt’s nearby Ram project, subject

of several feasibility studies. Note as well that Iron Creek has already been opened by

three historic adits, thereby reducing expected initial capex.

Assuming 45,492t Co contained and

the mean EV/t global of US$2,275

generates a $135 million valuation for

First Cobalt’s conceptual vein resources

in the Cobalt camp.



18

Figure 17: NAV and target generation

Source: Canaccord Genuity estimates

Our assumed development and production scenario is based on commencement

of production at Iron Creek at 1,000t/d in 2024, which reflects the stage of the

project and time to produce advanced studies and permits. The project is located on

patented ground, which aids permitting timelines. The throughput rate is generous

given potential constraints on flat space in the project area available to accommodate

the plant. At spot prices (see Don’t feel too blue about cobalt published 5 September)

of US$28/lb Co and US$2.65/lb Cu, we generate an after-tax NPV(15%) of $51

million (20% of project NAV and 18% of corporate NAV) and a 32% IRR. Note that on

our price deck featuring long-term US$49/lb Co and US$3.00/lb Cu, the NPV(15%)

rises to $152 million, while de-risking takes the valuation further to a NPV(10%) of

$316 million – very strong leverage to cobalt pricing and project advancement.

To our project NAV of $251 million or $0.59/sh we add net corporate adjustments of

$34 million or $0.08/sh including $25 million raised at $0.32/sh to fund First Cobalt

into 2020 with 422 million shares outstanding. We apply a 1.0x multiple to the

corporate NAVPS of $0.67 to yield our target NAVPS of $0.67, which supports a

rounded target price of C$0.70. The 100% projected return supports a SPECULATIVE

BUY rating, reflective of the lack of cash flow and consequent reliance on capital

markets to advance.

C$M C$/sh C$M C$/sh

Project NAV

Cobalt conceptual vein resources (3) $135 $0.32 $316 $0.93

Cobalt processing facility (4) $65 $0.15 $65 $0.19

Iron Creek project (5) $51 $0.12 $51 $0.15

Total Project NAV $251 $0.59 $432 $0.93

Corporate Adjusments

Equity Raised (@ $0.32/sh) (6) $25 $0.06

Working Capital $18 $0.04 $18 $0.05

G&A -$10 -$0.02 -$10 -$0.03

Long-term Liabilities -$1 $0.00 -$1 $0.00

ITM Warrants & Options $1 $0.00 $1 $0.00

Corporate Adjustments $34 $0.08 $9 $0.03

Corporate NAV $285 $0.67 $441 $1.30

Shares (Basic + ITM, M) 339

Shares (Funded, M) 422

Target Generation

Corporate NAVPS $0.67

Project NAVPS $0.93

Multiple 1.0x 0.7x

Corporate Adjustments $0.03

Target NAV $0.67 $0.67

Target Price (Rounded) $0.70 $0.70

Projected Return 100.0% 100.0%

Implied P/NAV(5%) at Current Share Price 0.27x

Notes: 1. Variable discount rate (WACC), P/NAV approaches 1.0x

2. Fixed 5% discount rate, variable P/NAV multiple

3. Peer EV/oz method

4. Independently assessed replacement value

5. Discounted cash flow analysis

6. Equity raised to partially fund drilling $0.32/sh

EV/oz Method (1) P/NAV Method (2)

Note that on our price deck featuring

long-term US$49/lb Co and US$3.00/lb

Cu, the NPV(15%) rises to $151 million,

while de-risking takes the valuation

further to a NPV(10%) of $316 million.



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19

Figure 18: Key parameters for a conceptual Iron Creek operation


Thackaringa PFS Iron CreekJuly 2018 CG Model

INPUTS Long Term

Cobalt Price (LME) US$/lb $33.80 $28.01

Premium 0% 0%

CoSO4•7H2O US$/lb $33.80 $28.01

Sulphur US$/t $145.00

Copper Price (LME) US$/lb $2.65

Exchange Rate

CDNUSD 0.77

AUSUSD 0.75

OPERATING METRICS

Total Ore to Process Mt 58.70 8.70

Strip Ratio 3.69x

Average Head Grades:

Cobalt 0.08% 0.30%

Copper 0.15%

Sulphur 8.7%

Mill Design Throughput t/d 14,384 1,000

Overall Recovery Rates:

Cobalt 85.5% 88.0%

Copper 95.0%

Sulphur 65.0%

Average Annual Production

Cobalt in CoSO4•7H2O t 3,558 883

Copper in Concentrate t 477

Sulphur Kt 291

Mine Life Years 12.8 26.0

COSTS

Initial Capital Costs US$M $413 $53

Sustaining Capital Cost US$M $113 $131

/t US$/t $1.92 $15.00

Operating Costs (LOM):

Mining (Open Pit) US$/t mined $2

Mining (Underground) US$/t mined $60

Processing US$/t milled $14 $15

G&A Cost US$/t milled $3 $5

Co Cash Costs, Net US$/lb $13 $10

All in cash costs (1) US$/lb $13

ECONOMICS @7.5% @15.0%

After tax NPV US$M 408 38

After tax IRR % 22.0% 31.6%

Payback Years 4.0 2.0

Notes:

(1) Cash costs plus sustaining capex



20

Our valuation is conducted on a partially funded basis targeting a 1.0x P/NAV

multiple. Alternatively, we present an unfunded valuation in Figure 17 whereby we

apply a 0.7x multiple to project NAVPS, reflective of exploration upside, and add net

corporate adjustments to arrive at the same target NAVPS.

At current price levels, First Cobalt is trading at 0.27x P/NAV(5%), which compares to

the 0.32x mean for covered exploration and development companies. This valuation

is based on spot cobalt whereas other non-cobalt companies are valued on the

Canaccord Genuity price deck. If valued on the price deck, First Cobalt would be

trading at an even more attractive 0.12x and feature a $0.91 target NAVPS. We also

note that First Cobalt is trading at an implied US$15/lb cobalt price as compared to

the current US$28/lb spot price and our long-term deck at US$49/lb.

Three key variables to which our target NAVPS is sensitive include the cobalt price, the

size of the conceptual resource modeled, and the issue price used in equity dilution.

The impacts of these variables are further explored in Figure 19.

Figure 19: Target NAVPS sensitivities to cobalt price, conceptual resource size, and issue price.


Potential catalysts and risks to our target price

Key potential share price catalysts looking forward include:

Iron Creek initial resource estimate late September.

Cobalt refinery recommissioning study results late September/early October.

Iron Creek metallurgical study results Q4/18.

Ongoing drill results from the Cobalt camp and Iron Creek.

Updated Iron Creek resource in early 2019.

Iron Creek preliminary economic assessment in 2019.

Initial resource estimate(s) from the Cobalt camp by year-end 2019.

$14.23 $21.35 $28.46 $35.58 $42.69

62.4 $0.41 $0.63 $0.84 $1.05 $1.25

52.0 $0.37 $0.57 $0.76 $0.95 $1.14

41.6 $0.32 $0.51 $0.67 $0.84 $1.01

31.2 $0.27 $0.44 $0.58 $0.72 $0.87

20.8 $0.23 $0.36 $0.48 $0.59 $0.71

$14.23 $21.35 $28.46 $35.58 $42.69

$0.53 $0.34 $0.54 $0.72 $0.90 $1.08

$0.44 $0.34 $0.53 $0.70 $0.87 $1.05

$0.35 $0.32 $0.51 $0.67 $0.84 $1.01

$0.26 $0.30 $0.48 $0.63 $0.79 $0.95

$0.18 $0.27 $0.43 $0.57 $0.71 $0.85

Cobalt (US$/lb)

Co

ncep

tual

(Mt

Co

)

Cobalt (US$/lb)

Issu

e P

rice

(C$/s

h)

We note that First Cobalt is trading at

an implied US$15/lb cobalt price as

compared to the current US$28/lb spot

price and our long-term deck at

US$49/lb.



21

Aside from the usual risks associated with early stage exploration, we highlight the

following:

The price of cobalt has been particularly volatile as have the prices of cobalt

equities. Aside from the impact on valuation, this has an impact on the ability

of the company to tap equity markets to advance its projects. Although First

Cobalt had $18 million in working capital at mid-year 2018, we include an

equity raise of $25 million at $0.32/sh over the next few quarters to fund the

company’s next steps. Valuation is somewhat sensitive to the issue price

used, a significant source of risk in itself.

The historic Cobalt mining camp features a significant number of

environmental and safety legacy issues including open stopes, waste piles,

and abandoned buildings and mining equipment, which may impact First

Cobalt’s risk profile going forward.

We have used publicly available drill hole data to generate conceptual

resource estimates that are not NI 43-101 compliant. Compliant resource

estimates to follow may vary considerably from our estimates, with significant

impact on our valuations.

We have relied on replacement value as a basis for valuing the Cobalt

refinery. An upcoming recommissioning plan will detail First Cobalt’s options

and their financial implications.

We have used the Cobalt Blue Thackaringa pre-feasibility study as a template

for valuing First Cobalt’s Iron Creek project. After the results of technical

studies on Iron Creek are released, this comparison may not be valid with

significant potential impacts on our valuation.

Scenario analysis

We use scenario analysis to gauge the impact of various changes to our assumptions

in valuing First Cobalt (Figure 20). These scenarios include:

A. We have assumed a total of ~72kt of cobalt contained in our conceptual

resource estimates for Iron Creek and the Cobalt camp. Reducing that

resource by 50% lowers the target NAVPS by $0.20 or 29%.

B. Applying a spot cobalt price 25% lower than current (US$28/lb) reduces

target NAVPS by $0.17 or 25%.

C. Increasing initial capex at Iron Creek by 50% reduces target NAVPS by $0.05

or 7%.

D. Increasing operating costs at Iron Creek by 25% reduces target NAVPS by

$0.04 or 6%.

E. At present we use a 15% discount rate in valuing Iron Creek. With further

advancement we can expect de-risking. Reducing the discount rate to 12%

increases our target by 12% or $0.08.

F. We currently apply a 0.5x risking multiple to the US$100 million replacement

value estimate for the Cobalt refinery. Increasing this multiple to 1.0x

increases target NAVPS by $0.16 or 23%.

G. Increasing our 72kt conceptual resource base by 50% takes our target NAVPS

up by $0.17 or 25%.

H. Applying a spot cobalt price 50% higher than current (US$28/lb) increases

target NAVPS by $0.17 or 25%.



22

Combining our negative scenarios (A-D) results in a bear case target NAVPS valuation

of $0.22 or 43% down from the current share price level. Conversely, combining our

positive scenarios (E-H) results in a bull case target NAVPS valuation of $1.26 or

224% up from the current share price level. This suggests a risk-reward balance

skewed well to the upside, supporting our SPECULATIVE BUY rating.

Figure 20: Scenario analysis


A Smaller resource (-50%) -$0.20

B Lower Co price (-25%) -$0.17

C Initial capex (+50%) -$0.05

D -$0.04

E $0.08

F Refinery at full replacement value $0.16

G Larger resource (+50%) $0.17

H $0.17Higher Co price (+25%)

Iron Creek de-risked (12% discount rate)

Operating costs (+25%)

$0.21

$0.67

$1.25

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

Bear A B C D Base E F G H Bull

$0.35

$0.21

$0.67

$1.25

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

Current

Price

1-Year

Target

NAVPS

Our scenario analysis suggests a risk-

reward balance skewed well to the

upside, supporting our SPECULATIVE

BUY rating.



23

Corporate structure

First Cobalt currently has 339 million shares outstanding with $18 million in working

capital and no debt at 30 June 2018. The warrants and options outstanding at 30

June 2018 are summarized in Figure 21. We note the contribution to NAV of $1.9

million from in-the-money warrants and options and take into account a $25 million

equity raise at $0.35/sh to fund next steps.

Figure 21: Warrants and options outstanding at 30 June 2018

Source: FactSet, Company Reports, Canaccord Genuity estimates

Expiry Exercise Price Number ITM? Number ITM Value ITM

Warrants

31-May-21 $0.06 200,000 Y 200,000 $12,000

16-Jan-20 $1.50 13,017,682 N 0 $0

13,217,682 200,000 $324,999

Options

13-Dec-21 $0.35 350,000 N 0 $0

21-Dec-21 $0.38 300,000 N 0 $0

28-Feb-22 $0.66 1,975,000 N 0 $0

30-May-22 $0.69 1,565,000 N 0 $0

25-Jun-23 $1.43 1,683,482 N 0 $0

25-Jun-23 $0.49 2,273,333 N 0 $0

3-Sep-18 $0.29 3,281,250 Y 3,281,250 $964,688

10-Feb-22 $0.29 187,500 Y 187,500 $55,125

3-Sep-18 $0.36 393,750 N 0 $0

16-May-21 $0.36 562,500 N 0 $0

3-Sep-18 $0.42 1,200,000 N 0 $0

31-Jul-22 $0.42 225,000 N 0 $0

3-Sep-18 $0.51 2,250,000 N 0 $0

15-Jan-23 $0.51 810,000 N 0 $0

30-Jan-23 $0.52 450,000 N 0 $0

$0.06 17,506,815 3,468,750 $1,019,813

Fully Diluted 369,925,486

Basic + ITM 342,869,739 $1,344,812

Equity Required $25,000,000

Working Capital Applied 0%

Equity Raise Modeled $25,000,000

Raise at $0.32

Issued 79,365,079

Partially Funded 422,234,818



24

Appendix A – Directors and key management

Trent Mell - President & CEO, Director

Mr. Mell, President, Chief Executive Officer and Director is a mining executive and

capital markets professional. He has been involved in over 200 transactions including

several financings totalling over $2.6 billion. He has experience working for both

global producers and junior miners as a Bay Street lawyer, and recently built a

securities team, which became the largest provider of flow-through capital in Canada.

Previously, he served as President & Head of Mining at Peartree Securities and as

President & CEO of Falco Resources.

Paul Matysek– Chairman

Mr. Matysek is a corporate entrepreneur, professional geochemist and geologist with

over 30 years of experience in the mining industry. He has made a career of

successfully building and selling companies. Mr. Matysek was recently Chairman of

Lithium X Energy, which was sold to Nextview New Energy Lion Hong Kong for $265

million. He was President and CEO of Goldrock Mines which sold to Fortuna Silver

Mines (FVI:TSX: $5.74 | Rated BUY by Dalton Baretto) for $178 million in July 2016.

He also served as CEO of Potash One, which was acquired by K+S Ag for $434 million

in a friendly takeover in 2011. Mr. Matysek was also the founder and CEO of Energy

Metals Corporation, a uranium company that grew from a market capitalization of $10

million to approximately $1.8 billion when sold in 2007.

Garrett Macdonald– Director

Mr. Macdonald is a mining engineer with over 22 years of experience in project

development and mine operations. He has managed large technical programs through

the concept, feasibility and into construction stages and has senior management and

board level experience with several public companies. He led JDS Energy & Mining’s

Eastern Canadian business operations as Vice President of Project Development. He

also held roles in mine operations and engineering with senior Canadian mining firms

Teck Corporation, Placer Dome and Suncor Energy, as well as the Vice President of

Operations for Rainy River Resources prior to $310M sale of Rainy River to New Gold

Inc. in 2013. He is currently the President & CEO of Tower Resources. He holds a

Master of Business Administration degree from Western University’s Ivey Business

School and a Bachelor of Engineering (Mining) from Laurentian University.

John Pollesel – Director

Mr. Pollesel has 26 years’ experience in the mining industry and is currently Senior

Vice President, Mining at Finning Canada. Previously, Mr. Pollesel has served as CEO

and Director of Base Metals Operations for Vale SA’s North Atlantic Operations, as

well as VP and General Manager for Vale’s Ontario Operations. Previously, Mr. Pollesel

served as the CFO for Compania Minera Antamina in Peru, a large copper/zinc mining

and milling operation.

Jeff Swinoga– Director

Mr. Swinoga is a Senior Executive with over 24 years’ experience in the mining and

public finance industries. Previously, he served as CEO of First Mining Gold, and CFO

of Torex Gold. His experience also includes roles as VP, Finance and CFO at Golden

Star Resources, North American Palladium, and Hudbay Minerals. Mr. Swinoga served

as Director, Treasury Finance of Barrick Gold Corp. for seven years.



25

Kevin Ma - CFO

Mr. Ma is a senior financial professional specializing in corporate financing, public

company reporting and regulatory compliance in Canada and the United States. He

also specializes in strategic planning, financial management, and capital markets.

Kevin previously served as CFO for Gatekeeper Systems Inc., where he raised

significant amount of growth capital, and as Director of Finance for Alexco Resource

Corp.

Dr. Frank Santaguida – Vice President, Exploration

Dr. Santaguida is a geoscientist with over 25 years of experience working around the

world in base and precious metals exploration. His experience working in world-class

base metal mining camps includes Kidd Creek, Mt. Isa, the Central Laplan Greenstone

Belt and, the African Copperbelt. Previously, Dr. Santaguida worked for First Quantum

Minerals Ltd. as Principal Geologist, where he was responsible for cobalt, copper,

nickel and PGE properties.

Peter Campbell – Vice President, Business Development

Mr. Campbell is a Professional Engineer with 35 years of experience in mining

operations, mineral exploration and capital markets. His experience includes senior

engineering roles and Exploration Manager at Falconbridge (now Glencore) where he

was responsible for global exploration activities as well as prospect valuation and risk

management. Peter previously served as the Chairman of Jennings Capital, an

independent Canadian broker-dealer. During his career as an analyst, he was first to

initiate coverage on Probe Mines, Integra Gold and Trelawney Mines.

Jason Rickard – Exploration Manager, Greater Cobalt Project

Mr. Rickard is a Geoscientist with more than 15 years’ experience working throughout

Canada. Previously, as Senior Geologist for Goldcorp Inc., Mr. Rickard managed the

Borden drill program, as well as planning and leading the regional exploration

program. He also served as Senior Geologist for Vale Exploration Canada where he

was heavily involved in exploration management as well as permitting and community

consultation.

Heather Smiles – Investor Relations

Ms. Smiles is a Certified Professional in Investor Relations with more than six years

experience in the mining sector and over a decade in communications. Previously, she

was with Investor Relations for Golden Star Resources, a gold producing company with

operations in West Africa. Heather also worked at North American Palladium Ltd.



26

Appendix B – The cobalt market

The following excerpts have been pulled from Cobalt: Out of the shadows and into the

spotlight (25 May 2017), Battery Materials Update (26 June 2017), and Cobalt -

Tangled up in blue (15 March 2018) written primarily by Reg Spencer and Larry Hill,

our research colleagues based in our Australian offices.

What is cobalt?

Cobalt (“Co”) is a hard, lustrous metal that possesses many of the same physical

attributes (melting point, density, extraction methods) as nickel. However, it is cobalt’s

high energy density, low thermal conductivity, ability to alloy, and ferromagnetism that

sees it used in diverse commercial, industrial, and military applications. On a global

basis, the leading use of cobalt is in rechargeable battery electrodes (within the

cathode of certain Li-batteries), with other primary uses including use in high

temperature, corrosion and wear resistant alloys (e.g., super alloys used in gas turbine

engines, aerospace), ceramics, catalysts and magnets. Unlike other Li-battery (Li-B)

input materials such as lithium (CGe ~42% 2017 global lithium market share) and

graphite (CGe ~9% 2017 global graphite market share), feedstock to produce cobalt

battery chemicals is by far the largest use of cobalt products, with a market share of

~50% in 2017 and growing (Figure 22).

Global supply – DRC dominates supply

Cobalt is rarely found as a primary metal in nature, with ~97% of global mined

production being recovered as a by-product of copper and nickel operations.

Production methods typically include mining and processing ore into concentrate or a

semi-refined product. These materials are then further refined into various forms

including cobalt metal products and specialty chemicals and compounds.7

Figure 22: CGe of cobalt demand 2018 - 2025






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27

Figure 23: Cobalt supply is constrained geographically (left) with the Democratic Republic of Congo dominating, and by producer (right) with the

majors dominating.

Source: Company Reports, USGS, Darton Consulting, Canaccord Genuity estimates

The USGS estimates (2016) global cobalt reserves at 7.0 Mt, with the Democratic

Republic of Congo (DRC) hosting a clear majority of known reserves at 49% of the

global total. The DRC is the world’s largest producer of mined cobalt at over 56% of

global output in 2016, followed by other major copper/nickel producing nations such

as Australia, Canada, and the Philippines. In addition to geographic constraints (Figure

23), cobalt supply is also constrained by producer, dominated by several majors.

Global cobalt supply (incorporating mined production and refined cobalt products) has

increased by a 6% CAGR since 2009, with estimated global mine supply in 2016 of

106kt, excluding difficult-to-estimate supply from artisanal/informal sources in the

DRC, which could constitute ~10-15% of the global supply.

A precarious balance

We expect overall annual refined cobalt demand to grow at ~9% CAGR to 213kt by

2025 as per Figure 22. This reflects our view of the key growth segment of Li-Bs for

EV/Storage applications based on overall penetration of 14% of global passenger

vehicle sales by 2025 (Figure 24).

Aside from considering the impacts of various incentive programs, one must also

predict the pace of the transition from high cobalt battery cathode chemistries like

LCO and NMC 111 to lower cobalt cathode chemistries like NMC 662 and NMC 811

(Figure 25). In our view, extensive quality and safety testing will slow acceptance of

the latter chemistries, which will then allow them to dominate new vehicle sales.

With an estimated 97% of current mined cobalt supply derived as a by-product of

nickel and copper production, the unhealthy reliance on DRC operations is unlikely to

dissipate in the near term. In fact, we believe that the dependence on the DRC is likely

to increase going forward as outlined in Figure 26, exacerbated by a very thin non-DRC

pipeline of projects.

Putting it all together (Figure 27), we expect that the market will remain tight until

2020. Even then, small supply excesses could easily be vulnerable to supply

disruptions due to political upheaval or even strife within the DRC. We expect that the

cobalt price will remain elevated, further motivating battery precursor manufactures to

thrift within NMC cathode formulations. This is anticipated to have the effect of

bringing the market into balance before unspecified new supply is required to avoid

deficits of >7%. Our price deck features a long-term (+2025) forecast of US$49/lb.



28

Figure 24: CGe forecast of EV sales penetration 2017 - 2025.


Figure 25: CGe of cobalt distribution in cathodes




29

Figure 26: CG mined cobalt supply forecasts dominated by the DRC


Figure 27: CGe of cobalt market balance 2018-2025


Key influences on our near-term supply projections include the ramp-up of large

projects such as the whole of ore leach project at Kamoto (toward 31kt) along with the

nearby Sicomines operation (towards 12kt). We also expect consolidation in refined

cobalt operations will reduce the impact of process loss; however, this could be offset

by a lack of capacity to provide adequate supply of refined chemical products.

Overall demand is expected to continue to grow at 8% CAGR to 2025 with industrial

applications such as super alloys assumed to only grow at 0.5% p.a. as end users are

expected to reduce cobalt content in with chromium alloys. Within the key EV and

storage battery segment, demand is expected to equate to a CAGR of 26% until 2025.



30

Appendix C – Cobalt, Ontario

History

Cobalt is located ~500km north of Toronto, in northeastern Ontario and was named

during the construction of the Temiskaming and Northern Ontario Railway for one of

the elements found in the arsenide minerals within the veins found at surface. In

1884 Sir William Logan discovered a vein bearing cobalt at what would become the

Agaunico mine, 1km south of the town of Haileybury. The first mine in the Cobalt camp

commenced operations in 1904 and produced mainly silver, almost continuously until

1989. Between 1909 and 1989 there were approximately 140 silver-cobalt properties

in the Cobalt Embayment. Official production during these times, although possibly

under-reported, was 553,168,278 oz Ag, 24,685,219 lb Co, 3,624,546 lb Ni, and

2,625,714 lb Cu.

The camp is broken into two main mining areas, Cobalt and Silver Center. The Cobalt

mining camp is located to the north of Silver Center and featured the Silverfield Mine,

the Kerr Lake deposit (Kerr, Hargrave and Consil mines), the Lawson Mine, and the

Ophir mine.

The Silverfield Mine operated from 1903 until it was eventually shut down by

Teck in 1983. Although cobalt production is uncertain, grades reported vary

from 0.25-1%.

The Kerr Lake deposit was discovered in 1904, commercial production began

in 1905 and the mine operated intermittently until 1964. A total of eight

shafts were sunk on the Kerr Lake claims, along with one adit that was driven

south from the shoreline of Kerr Lake. These underground workings were

connected to Hargrave, Conisil, and Lawson Mines.

The Lawson deposit was discovered in 1905 and production at the Lawson

Mine commenced in 1909. From 1922 to 1944 the Lawson Mine was

operated pursuant to several leases. The mine re-opened in 1953 and

remained in operation until 1960 by Silver Miller Mines Ltd. No record of

silver production came during this period, as the ore was mixed with other

Silver Miller ores from surrounding mines.

In 1977 St. Joseph Exploration constructed the Canadaka Mill, which was

designed to process up to 500 tons per day; however, it was estimated to

only have processed 350 tons per day. The mill was closed in 1980 when the

company’s mines ceased operations. Sulpetro Minerals Ltd. bought the mill in

1983 and modified it to process tailings being mined at the Chambers-

Ferland tailings containment area. Milling rates averaged 450 to 500 short

tons per day. The mill was later sold to Trio during the acquisition of the

Property. In 2012 Trio completed diamond drill holes, one of which

intersected mineralization consisting of cobaltite +/- silver veinlets up to

several millimeters wide. The diamond drilling, however, was not conducted

to industry standards as outlined by CIM Best Practice Guidelines.

The Ophir Mine reported production of 2.2Kg silver in 1921 and 2,282

tonnes of cobalt mineralization extracted in 1954. Cobalt mineralization was

generally restricted to the vein proper, so the width of the stope was kept

small. Minor silver and bismuth were reported in the stoped material. Total

production is uncertain, and further complicated by the fact that the claim

was also accessed via shafts and underground development from the

adjacent Mayfair and Silver Banner mines.



31

The Silver Center mining camp is in the southern part of the district and was host to

the Lang-Caswell, Keeley, Frontier, and Bellellen mines.

Lang-Caswell is the furthest north of the afore mentioned mines and reported

minor production of 46.8kg Ag and 2,237kg Co in 1936.

Further south in the Keeley-Frontier area, silver mineralization was first

discovered in 1907 and led to the development of the Keeley mine. The

claims where the silver was discovered traded hands several times. The

“Farmers Bank” owned the claims briefly, but were never owners of the mine.

Liquidators gained possession of the Keeley mine after the Farmers Bank

failed. Keeley Mine Limited became the operators of the property and kept it

in good standing. In 1913 The Association of Gold Mines of Western Australia

acquired the option on the property and in 1919 the property and majority of

the stock in Keeley Mine Limited was transferred to Associated Gold. In 1933

Keeley Mines Ltd. and the property were acquired by Anglo-Huronian.

Along with the Keeley mine, the other key mine in the area is the Frontier

mine. It was in the south half of the Haileybury Silver Mining Company’s claim

and the claim was purchased by Henry Newburger in 1912. Newburger

formed the Haileybury Frontier Company and sank two shafts into the

property. After Newburger’s death in 1914 his brother bought into the

property. The mine remained closed until 1920 when Joseph Newburger had

the mine dewatered and examined by several silver-mining companies.

Horace Strong purchased the property in 1920 and secured a one-year lease

option to purchase the Frontier Mine. Strong discovered high-grade silver on

the south half of the claim in 1921 immediately north of the Keeley claim.

In 1921 the Mining Corporation of Canada amalgamated several companies

and claims, including the Haileybury Silver Mines and Frontier Mine

properties, the former Compton, Little Keeley, and the Keeley Extension

properties into Frontier Silver Mines Limited. The intermittent production at

Keeley Mine, operated by the Keeley Silver Mines Ltd., from 1908 to 1942

totalled 12,154,353 oz Ag and 1,617,684 lbs Co. The Frontier mine was

operated by the Mining Corporation of Canada from 1921 to 1943 and

produced 6,695,415 oz Ag, 1,683,769 lb Co and 12,158 lb Ni.

In 1961 Keeley-Frontier Mines Limited purchased and consolidated the 13

patented claims that now form the core Keeley-Frontier patent claim group. It

was subsequently re-organized as Canadian Keeley Mines Ltd. in 1964 and

then became Keeley Frontier Resources Inc. in 1980. Work on the property

from 1961-1962 included dewatering and rehabilitating the mines. The two

mines were connected at three points. The Woods vein had been mined out

by this time and the 1963-1965 Keeley-Frontier mine produced 347,645 oz

Ag & 9,003 lb Co & 14,358 lb Ni, which came primarily from the Keeley Mine

and reprocessed tailings. Agnico Eagle optioned the property circa 1969 to

1972 and completed an underground drilling program.

The property changed hands from Keeley Frontier Resources to M&M

Porcupine Gold Mines in 1984, and to 155433 Canada Limited, a subsidiary

of LaChib Development Corporation, in 1987.

In 1994 Transway Capital Inc. acquired the property and sold 10,000 tons of

muck to Cobatec Ltd.

1695255 Ontario Inc. acquired the property in 2007 and then changed its

name to Silver Centre Resources. They subsequently changed their name to

Canadian Silver Hunter Inc. in 2010 and completed a six-hole diamond



32

drilling program. In 2012 they completed bedrock stripping, channel

sampling, geological mapping, and mechanical stripping.

The last mine in the Silver Center camp, the Bellellen mine, operated

intermittently from 1910 to 1943 and produced 1,182,772 oz Ag, 28,481 lb

Co and 13,404 lb Ni.

Geologic Setting

The Cobalt, Ontario district is host to the two Cobalt-Gowganda silver-cobalt mining

camps. They are found within the Cobalt Embayment and are hosts to silver-cobalt

“vein style” mineralization. Economic grade deposits in the Cobalt and Gowganda

mining camps are hosted within or adjacent to diabase sills, located proximally to the

Huronian-Archean unconformity. Silver-cobalt vein deposits have been discovered

along the north and northeastern margins of the Cobalt Embayment where the

Proterozoic vein systems typically occur in proximity to the pre-Huronian faults that

were reactivated during emplacement of the Nipissing Diabase.

The Cobalt Embayment represents the northeastern part of the Southern geological

province, close to the boundary of the Superior and Grenville provinces and is a

continental rift system that is a large, 120km across, circular domain of flat-lying,

gently undulating succession of dominantly siliciclastic sedimentary rocks belonging to

the Huronian Supergroup. The embayment is bounded in most directions by Archean

rocks, except to the south, where it is truncated by the Grenville Front tectonic zone.

The Archean basement is exposed as isolated inliers in the north and northeast

margin of the Cobalt Embayment. The basement consists of metavolcanic rocks and

associated interflow sedimentary rocks of the Abitibi Subprovince, one of the world’s

largest, best preserved, and most economically productive greenstone belts. The

Cobalt Project properties cover the main eastern Cobalt Embayment portion of the

Nipissing sill complex and most of the exposed Archean-Proterozoic unconformity.

The Cobalt Group is relatively undeformed Huronian Supergroup rocks. Within the

Cobalt Group, the Coleman member, a basal conglomerate above the steeply dipping

and folded Archean volcanic rocks, is the most important member as it is the

sediment host to the silver-cobalt vein deposits. It is composed of conglomerate,

greywacke, quartzite and laminated siltstone, and has a maximum thickness of 180m.

The Nipissing Diabase is interpreted as a thick undulating sheet intruding the Cobalt

Group sediments at or immediately above the Archean unconformity. Intrusions that

are closer in proximity to the steeply dipping Archean basement volcanic rocks, is

where more vigorous fracture generation occurs relative to the flat-lying Huronian

sequence. The Nipissing diabase and regional high heat flow/geothermal gradient

served as a heat source to mobilize metals from the Huronian and Archean rocks and

advect hypersaline formation brines. Both mineralizing solutions and magmas may

have utilized the periodically reactivated, deep regional fault systems to access the

upper levels of the crust. Deposition occurs where oxidized basin fluids reacted with

localized reductants and possibly structural traps where boiling may augment

deposition.

Mineralization occurs as Ag-Co-Ni-Bi-arsenides, predominantly hosted in veins and

stockworks known as the Five-Element Vein Type deposits. The silver dominated

veins, with subordinate cobalt, nickel, copper and zinc content, are mostly located in

the northern part of the embayment. The cobalt dominant veins, however, are found

mainly in the eastern margin of the embayment in the Cobalt and Silver Center mining

camps. Deposits in the Cobalt mining camp are extremely rich, polymetallic, small and

narrow, sharp-walled and fracture-infilled veins. Although the ore is localized, the vein

systems themselves can be quite extensive, in some instances they completely

transect the Nipissing sills, and often continue for significant distances into

surrounding country rocks. Their extent can be as much as 1000m horizontally and



33

120m vertically. Silver-cobalt ore is found almost exclusively within the steeply dipping

veins but has a restricted vertical extent, and in flat-laying veins it is only present at

intersections with steep veins. The ore veins are characterized by a complex ore

mineralogy composed of arsenides and sulpharsenides of Co, Ni, Fe together with

native silver and bismuth, with minor antimonides, and sulphides of Pb, Sn, and Cu.

Silver grades are highest in the Ni-bearing assemblages, and intersections of flat and

ore vein are commonly preferred sites for ore deposition.

The Silver Centre area is different than the Cobalt mining camp. Production veins are

predominantly found in the Archean metavolcanics rocks adjacent to the first 60m

upper contact of the diabase sill. Ore shoots range in length up to 30m and width from

15cm to 1m. Most of the veins are localized in steeply dipping fault zones.



34

Appendix D – The Idaho Cobalt Belt, Idaho

History

First Cobalt’s Iron Creek property is in the Idaho Cobalt Belt approximately 29km

southwest from Salmon, Idaho. The Property has had substantial historical work

completed including approximately 1,500 feet of underground workings, several

copper and cobalt targets identified by three different companies, and a non-NI 43-

101 compliant historic resource. The name of the property originates from 1946 when

it drew attention for iron prospecting. In 1967, during the construction of a logging

road, 14 claims were staked on copper stains in the No Name Zone.

In 1970 the claims were leased to Sachem Prospects Corporation. Sachem completed

an exploration program that included staking, geologic mapping, aerial photography,

induced polarization, self potential, magnetic and geochemical surveys over the No

Name Zone. They also drilled eleven diamond drill holes and drove three drifts. They

optioned the property in 1972 to Costal Mining Co. and Idaho Mining Co, wholly

owned subsidiaries of Hanna Mining (Hanna), Hanna then went on to acquire the

property a year later through a lawsuit.

By 1967, Hanna had spent a total of $536,000 on exploration activities on the

property including a PEA, reconnaissance of four additional zones, and diamond

drilled a total of 13,250 feet, mainly on the No Name Zone. In 1979 Noranda

Exploration Inc. earned a 75% interest in the property when it optioned the nearby

Blackbird Mine property from Hanna. Noranda conducted $132,000 of exploration

work by 1983. In 1985 Inspiration and Noranda released the property and Hanna

rehabilitated the workings and drove a new portal into the 6500 Level adit around the

caved original portal. The Property also hosts a historical estimate of 4.57 million tons

grading 1.84% copper. This historical estimate is from the Noranda Report that notes

that, in the west zone of the No Name Zone, there is the presence of 4.57 million tons

grading 1.84% copper "possible reserves" or similar.

The property was acquired from Hanna in 1988 by Centurion Gold whose objective

was to find additional gold mineralization. Through their work, Centurion found copper-

cobalt mineralized intersections of up to 25ft grading 5.54% copper and 0.19%

cobalt, three additional copper-cobalt targets, and a location within a belt of rocks that

contains similar copper-cobalt mines and showings.

The property was then leased to Cominco American Resources Inc. in 1991. Cominco

was looking to upgrade and enlarge the area of copper-cobalt mineralization, however,

after two years of exploration work geologists were not able to identify good potential

for substantially increasing reserves and grade of the Iron Creek deposit.

In 2016 Scientific Metals (STM) entered into a letter agreement with a private

company providing STM with exclusive rights to enter into a lease agreement with an

option to acquire a 100% interest in the Iron Creek Cobalt Property. STM changed

their name to US Cobalt in May 2017. Since 2016, US Cobalt has completed

approximately 35,000ft. of core drilling from surface, rehabilitated two of the three

adits, and commenced underground core drilling. US Cobalt announced a friendly

acquisition of the company by First Cobalt in an all share transaction on March 14,

2018.

Geologic Setting

The Iron Creek Project lies within the Blackbird copper-cobalt district, the most prolific

trend of cobalt mineralization in the Idaho Cobalt Belt. The Idaho Cobalt Belt is similar

in formation to the world class Copper Belt located between Zambia and the

Democratic Republic of Congo. Large tabular mineralized lenses lay within fine

grained sedimentary and metasedimentary strataform horizons. This style of



35

mineralization differs greatly from the Ag-Co “vein style” mineralization found in

Northern Ontario and may be more amenable to larger scale commercial production.

The rock that hosts the Iron Creek mineralization is part of the upper Middle

Proterozoic Yellowjacket Formation, which is the oldest unit within a 50,000-ft thick

sedimentary section. The mineralization occurs within the Middle Member of the

Formation and is associated with tuffaceous and exhalative deposits in a sequence of

argillite, phyllite and lesser quartzite. Bedding and foliation are prominent, and both

generally strike northwest and dip 60º to 80 º northeast. The rocks at the Iron Creek

Property have undergone intense penetrative deformation. Small recumbent, isoclinal

drag folds are common among the strata and compose fields of unique orientation

and drag sense that can imply only the presences of much larger isoclinal folds.

The main mineralized zone on the Property is the No Name Zone, typified by steeply

dipping, tabular zone containing a “swarm” of en-echelon layers and lenses composed

of copper, iron, and cobalt sulphides, and magnetite. This Zone and it’s massive-

sulphide components are concordant primarily with the flanking metasedimentary

rocks, implying a syngenetic origin where cross cutting veins have also been

identified.

Dominant minerals in the No Name Zone include pyrite (FeS2), magnetite (Fe3O4),

chalcopyrite (CuFeS2), native copper (Cu) and pyrrhotite (Fe1-xS). Oxidation and

weathering have formed gossans of quartz, jarosite, goethite and hematite with

malachite staining and some remnant sygenetic mineralization. Cobalt occurs almost

entirely within pyrite. Two varieties of pyrite have been identified on the property, a

cobalt-rich variety containing 2.5%-4.5% Co and a cobalt-free pyrite. There appear to

be three stages of pyrite deposition, chalcopyrite probably is coincident with the last

pyrite stage while marcasite and the rare cobaltite are later than the chalcopyrite.

There are three other Zones on the property, Jackass, Footwall No Name, and

Sulphate. The Jackass Zone is located 2000 ft. southeast of the No Name Zone.

Outcrop mapping indicates the presence of zoning like the No Name Zone, where

magnetite and pyrite are confined to the footwall of the zone. Pyrite increases, and

magnetite decreases in abundance in the stratigraphic sequence. Unlike the No Name

Zone, there is an upper magnetite zone in the hanging wall which outcrops along the

road. The Footwall No Name Zone is a copper-cobalt zone that occurs stratigraphically

below the No Name Zone possibly along strike with the Jackass Zone. It’s 2000-foot

strike length is at least partly covered by Tertiary Challis Volcanics. The Sulphate Zone

is another stratabound, magnetite-rich mineralized area that exhibits conformable,

narrow zones of magnetite and pyrite, resembling the No Name and Jackass Zones.

Malachite stains chloritic rocks in the area. No distinct mineralogical zoning is evident

within the Sulphate Zone.



Appendix: Important DisclosuresAnalyst CertificationEach authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) therecommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent andobjective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoringanalyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to thespecific recommendations or views expressed by the authoring analyst in the research.Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons ofCanaccord Genuity LLC and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communicationswith a subject company, public appearances and trading securities held by a research analyst account.Sector CoverageIndividuals identified as “Sector Coverage” cover a subject company’s industry in the identified jurisdiction, but are not authoringanalysts of the report.

Investment RecommendationDate and time of first dissemination: September 18, 2018, 06:49 ETDate and time of production: September 18, 2018, 06:49 ETTarget Price / Valuation Methodology:First Cobalt Corp. - FCCWe value First Cobalt’s assets on a spot cobalt basis, currently US$28/lb. Our valuation yields a project NAV of $251 million or $0.59/sh.We add net corporate adjustments of $34 million or $0.08/sh including $25 million raised at $0.32/sh to fund First Cobalt into 2020with 422 million shares outstanding. We apply a 1.0x multiple to the corporate NAVPS of $0.67 to yield our target NAVPS of $0.67, whichsupports a rounded target price of C$0.70.Risks to achieving Target Price / Valuation:First Cobalt Corp. - FCCAside from the usual risks associated with exploration and development, risks centre on cobalt pricing, the technical assumptions wehave made in our project valuations in advance of the company’s delivery of technical reports, and potential risks from environmentaland safety legacies in the Cobalt mining camp in Ontario.

Distribution of Ratings:Global Stock Ratings (as of 09/18/18)Rating Coverage Universe IB Clients

# % %Buy 558 63.19% 44.98%Hold 212 24.01% 29.72%Sell 11 1.25% 27.27%Speculative Buy 102 11.55% 65.69%

883* 100.0%*Total includes stocks that are Under Review

Canaccord Genuity Ratings SystemBUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.

HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months.

SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months.

NOT RATED: Canaccord Genuity does not provide research coverage of the relevant issuer.“Risk-adjusted return” refers to the expected return in relation to the amount of risk associated with the designated investment or therelevant issuer.Risk QualifierSPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in thestock may result in material loss.

12-Month Recommendation History (as of date same as the Global Stock Ratings table)



A list of all the recommendations on any issuer under coverage that was disseminated during the preceding 12-month periodmay be obtained at the following website (provided as a hyperlink if this report is being read electronically) http://disclosures-mar.canaccordgenuity.com/EN/Pages/default.aspx

Required Company-Specific Disclosures (as of date of this publication)First Cobalt Corp. currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period,Canaccord Genuity or its affiliated companies provided investment banking services to First Cobalt Corp..In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services fromFirst Cobalt Corp. .In the past 12 months, Canaccord Genuity or any of its affiliated companies have been lead manager, co-lead manager or co-managerof a public offering of securities of First Cobalt Corp. or any publicly disclosed offer of securities of First Cobalt Corp. or in any relatedderivatives.Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Bankingservices from First Cobalt Corp. in the next three months.The primary analyst, a member of primary analyst's household, or any individual directly involved in the preparation of this research, hasa long position in the shares or derivatives, or has any other financial interest in First Cobalt Corp., the value of which increases as thevalue of the underlying equity increases.

First Cobalt Corp. Rating History as of 09/17/2018C$1.60C$1.40C$1.20C$1.00C$0.80C$0.60C$0.40C$0.20C$0.00

Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18

Closing Price Price Target

Buy (B); Speculative Buy (SB); Sell (S); Hold (H); Suspended (SU); Under Review (UR); Restricted (RE); Not Rated (NR)

Past performanceIn line with Article 44(4)(b), MiFID II Delegated Regulation, we disclose price performance for the preceding five years or the whole periodfor which the financial instrument has been offered or investment service provided where less than five years. Please note price historyrefers to actual past performance, and that past performance is not a reliable indicator of future price and/or performance.

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