PERTH (miningweekly.com) – Dual listed Jervois has suspended construction at its Idaho Cobalt Operations (ICO) owing to falling cobalt prices and inflationary impacts on construction costs in the US.

The company said on Wednesday that cobalt prices were expected to recover in the medium term from influences of the energy transition and Western cobalt purchasers’ increasing preferential to buy from sources with Western environmental and social governance credentials, and that Jervois would complete the construction and commissioning of ICO when cobalt prices recovered.

Jervois will immediately start an orderly and rapid demobilisation of construction contractors from ICO’s site, which is expected to be completed in the coming weeks.

Total workforce, including contractors, will reduce from approximately 280 to under 30, which represents a fit-for-purpose workforce to maintain the site in compliance with its regulatory requirements.

The company told shareholders that not mining ICO cobalt at cyclically low prices would preserve the optionality and inherent strategic value of ICO for shareholders and key stakeholders.

In the meantime, the company has applied for funding from the US Department of Defence (DoD) to accelerate drilling to increase the mineral resource and reserves at ICO, and to assess the construction of a US cobalt refinery, which will both proceed despite the suspension of construction at ICO.

The DoD has advised that it would award Jervois $15-million in funding through a Not to Exceed Technology Investment Agreement, subject to Jervois successfully completing the required documentary steps.

Jervois said on Wednesday that the company is also engaging with the US Department of Energy and export credit agency EXIM on further financing initiatives.

Jervois has spent nearly $130-million on construction at ICO, has a cash balance of $52-million, and since the December 2022 year-end, has paid down $45-million of its $150-million Mercuria loan facility resulting in a decrease from the end December 2022 drawn balance of $115-million to $70-million.

The company’s $100-million senior secured bonds remain due in July 2026, with no prior amortisation.