A Rare Player Ready to Meet the Green Nickel Demand

(Image via Talon Metals Corp.)

“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way ….” - Elon Musk, July 23, 2020.

The need for sustainable sources of nickel to advance battery technology, particularly for those advancing EV technology, is well documented. The production of Green Nickel for batteries all starts and ends with the rocks it is mined from: They need to be high in nickel and low in deleterious elements.

Of note for investors engaged in metals and mining, an emerging operation located in Minnesota, USA is one of the few undeveloped deposits that meets these criteria.

Talon Metals Corp. (TSX: TLO, OTC Pink: TLOFF, Forum) is a base metals Company in a joint venture with Rio Tinto on the high-grade Tamarack Nickel-Copper-Cobalt Project, which consists of the Tamarack North and South Projects that the Company has an earn-in to acquire up to 60% of.

This is a project in the “Goldilocks zone” of the typical value curve for exploration projects – there is significant resource expansion in progress, at a time when demand for nickel is on the verge of exploding.


(Tamarack North Project NI 43-101 Mineral Resource Estimate (February 15, 2018) - Tamarack and 138 Zones.)

The Tamarack Project comprises a large land position (18km of strike length) with numerous high-grade intercepts outside the current resource area. Talon is focused on expanding its current high-grade nickel mineralization resource prepared in accordance with NI 43-101; identifying additional high-grade nickel mineralization; and developing a process to potentially produce nickel sulphates responsibly for batteries for the electric vehicles industry.

Stockhouse Editorial caught up with Talon Metals’ President Sean Werger to find out more ….

1. Thank you for joining us. The Company’s value has increased significantly over the past 12 months. What are some major drivers of this increase in value?

Yes, it has certainly been an exciting and busy year for us!

It really all started with our Company formally taking over operatorship of the Tamarack Project from Rio Tinto in October 2019. At that time, we took over control of the project, with the right to determine overall exploration strategy and approach at the Tamarack Project.

Since taking over operatorship, the following have been some of the drivers for change in our valuation:

• Talon’s January to May 2020 Successful Exploration Program: In January 2020, Talon started its first exploration program as the operator/manager of the Tamarack Project. This program was really intended to be Talon’s coming out party to prove to the market that Talon could operate the project successfully and responsibly, just like Rio Tinto. The main focus of the program was really to better define and expand the existing high-grade resource area. Needless to say, Talon’s first drill program as operator was a huge success, with 6 of the 8 holes drilled intersecting high-grade nickel-copper mineralization. The grades across the 6 holes ranged from 4.23% nickel to 8.31% nickel. To help calibrate this for readers, it has been reported that the average global underground nickel grade is current just above 1% nickel – so these are extremely high grades. All in all, during our first program as operator, the 6 holes intersected a total of 38 meters (125 feet) of mixed and massive sulphide mineralization (high-grade mineralization). We could not have been more pleased with the drilling results.

• Talon’s Use of Geophysics to Help Identify Mineralization: We also had success during our first exploration program with the use of various geophysical techniques to try and identify additional mineralization at the Tamarack Project. To this end, a surface electro-magnetic survey was conducted during the program, and has suggested the potential for a 1 kilometer extension of nickel-copper sulphide mineralization to the south of the Company’s resource area. We plan to test these anomalies with some drill holes during our current, ongoing drill program.

• Talon’s New Technical Report (Updated PEA): In March 2020, the Company came out with an updated Preliminary Economic Assessment (PEA). The PEA demonstrated robust economics at the Tamarack Project, with an after-tax NPV of US$291 million; an after-tax IRR of 36% at base case metal prices; low C1 cost of UD$2.67 per pound of nickel in concentrate; high nickel and copper recoveries of 83.4% and 94.4%, respectively; low initial and total CAPEX of US$219 million and US$259 million, respectively; and a mine life of 7.5 years, with quick after-tax pay-back of 2.5 years. Of note, this updated PEA only included a portion of the resource tonnage in the mine plan – notably, the Company has recently announced some positive metallurgical results that suggest that additional tonnage will likely be included in the mine plan, increasing both throughput and mine life at the Tamarack Project (see the Company’s press release dated July 8, 2020).

• Flowsheet to Produce a Nickel Sulphate: We have also been progressing our flowsheet work towards potentially developing a nickel sulphate (i.e., a product for the electric vehicle battery market), and we hope to have an announcement out about this in the coming months. We also intend to eventually attribute economics to producing a sulphate, and showing its impact on the project’s valuation. Ultimately, we will compare and contrast this with producing a concentrate either for the stainless steel market or the EV sector.

• Elon Musk: In addition to the above, we almost forgot to mention that small thing that Elon Musk said about nickel….."Wherever you are in the world, please mine more nickel…Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.” This definitely had an impact on the valuations of most nickel projects across North America, including Talon.

2. What does it mean to be efficient in the Nickel market?

As discussed above, Elon Musk recently made the comment that nickel companies should try to mine nickel “efficiently”.

In our view, efficient mining is really just about focusing on projects that are high-grade, with high recoveries of metal from the rock. At the end of the day, this means there will be limited waste materials. This is truly how to mine efficiently.

What is high-grade? Well, one obviously has to look at both proposed mining method, as well as the depth of the ore to mined. More generally, it has been reported that the current average global grade for underground nickel projects is just above 1% nickel.

3. What does it mean to have Green Nickel and what is the importance of that movement?

From our perspective, “green nickel” is nickel that has been sourced in an environmentally and socially responsible way. https://talonmetals.com/what-environmental-studies-have-been-done-on-the-project/. It means that from mine to battery, every step is carefully controlled. This is important as we, the caretakers of this planet we live on, continue to look for ways to reduce greenhouse gases and reverse the effects of careless practices from past generations. The idea behind green nickel is to allow people to truly feel good about the end product they are getting from this process, so when you purchase an electric vehicle, you can know that you are truly doing your part to protect our environment.

4. The Tamarack Project will see its tailings cemented underground, with no tailings dam required, can you explain this a bit further?

Tamarack will eventually be mined using underground mining methods that require backfill once a mining area has been mined out. This is done in order to mine subsequent areas safely, in order to avoid ground failure and the potential for subsidence. A suitable recipe can be made by a utilizing a combination of cemented tailings (better known as “Paste Backfill”) and waste rock that is mined in order to access the mineralized areas. This will not only offset more than 60% of the tailings that would normally be stored on surface utilizing alternate mining methods, such as open pit mining or underground caving, but also minimizes the potential for waste rock oxidization as its exposure to air is minimized.

From an environmental standpoint, we see having a tailing dam as being a significant risk – to be clear, we do not plan to have a tailings dam at the Tamarack Project. There is a long history of tailings dam failures that have caused both environmental destruction and human casualty.

Unlike many larger operations that mine low grade material with very high throughput, our tailings will be amenable to a dry stack method. This is a simple process whereby water is filtered out of the tailings and heap stacked in a manner that minimizes surface impact and does not require large containment berms that could potentially fail. An added benefit to our dry stack facility is that the rock types that will be contained within the facility have the ability to sequester carbon, meaning they can will absorb some CO2 from the atmosphere where it reacts with the tailings and becomes a nonreactive mineral.

5. For battery and vehicle manufacturers looking for the lowest cost product produced in the most responsible way, do you expect Talon Metals will play a critical role in this supply chain, and can you elaborate?

As is illustrated and discussed on our website in detail at www.talonmetals.com under the heading “Battery Nickel Supply Chain”, the current nickel supply chain has been built for the stainless steel industry, not for the batter industry https://talonmetals.com/show-me-the-present-battery-nickel-supply-chain-options/ – in other words, because the supply chain has not been built with the battery industry in mind, the current supply chain is extremely inefficient for producing nickel for batteries. Each step along the way (refining, smelting, etc.) results in additional and unnecessary costs, requires additional transportation, and increases the overall environmental footprint of the project.

At Talon Metals, we believe that we have an opportunity to create a domestic (USA) supply chain for battery grade nickel. Because we have a clean concentrate, we are looking to remove a number of steps from the traditional supply chain, including refining and smelting.

At the moment, as far as we are aware, the Tamarack Project is the United States’ only answer to high-grade USA produced nickel for batteries.

Interestingly, during Tesla’s Battery Day, Elon Musk’s comments fully echoed ours, as Tesla announced that they too are looking to condense the supply chain by cutting out a number of the inefficient steps along the way to producing a cathode in the USA.

6. Talon has a well-qualified exploration and mine management team with extensive experience in project management, can you run us through your experience and that of your team?

The current team at Talon Metals definitely has a lot of depth:

• We are partners on the Tamarack Project with Rio Tinto. Prior to taking over operatorship of the project in October 2019, Rio Tinto allowed us to hand pick from their team who would remain with the project. By way of example, our current head of exploration is a full-time Rio Tinto employee who has joined our team on a 100% secondment basis.

• Some of the members of the Talon Metals team previously worked together for many years on a number of successful exploration projects, throughout Africa and Brazil. These projects have all been acquired by other companies, and in some cases, by major mining companies based on significant multiples to investors.

• Certain members of the Talon Metals team have deep nickel experience. For example, the Company’s geophysicist, previous worked on the Voisey’s Bay nickel project, the Company’s metallurgist previously worked for Falconbridge/Xstrata (now part of Glencore).

7. The demand for nickel has been projected to outpace the supply, with stainless steel likely needing clean sulphates even more than electric vehicles, what do you predict for this industry, specifically for those who can’t produce high grade environmentally friendly nickel … but also for those few like yourselves who can?

We believe that auto companies, knowing that their customers care about where the raw materials such as nickel, cobalt and lithium originate, will be selective in choosing which projects they get behind and will lean towards environmentally friendly, efficiently produced nickel. As for stainless steel, the nickel smelters that traditionally have soaked up all the supply of nickel sulphide concentrate, will likely have to compete with the battery industry in a climate where nickel concentrate supply has been flat to decreasing. As a result, the optionality for the Tamarack Project is ideal since we can go either route.

8. Looking six months to a year down the road, what do you predict for the future of your business to excite investors? What upcoming milestones are you targeted to achieve?

The near-term catalysts include:

• August 2020 drill program: We just started a new drilling campaign in August 2020, and the intention is to drill right through to the end of the year. The program will mainly focus on drilling outside the Company’s existing resource area with the goal of growing the size of the project. We will also look for further define our existing high-grade resource. Given the constant drilling, investors should expect steady news flow over the coming months.

• Test program to determine if battery-grade nickel sulphate can be produced to supply the lithium-ion battery industry: We are continuing our work on a flowsheet for producing a nickel sulphate from the Tamarack Project. The work will ultimately culminate in an analysis of the economic impact this could have on the project.

• Continued Strategic Discussions: We are in constant discussions with numerous companies in the supply chain, including automobile manufacturers, battery companies, chemical companies and nickel mining companies.

9. Thanks again for taking the time to speak with us and for telling us more about your Company, anything final to add?

Just that we cannot overemphasize the strategic value in being a high-grade nickel project located within the USA. Given that we are one of the only ones (if not the only one), if any company is looking to make USA manufactured batteries for EV’s, we are a logical choice to become a key supplier.

For more information on this natural resource exploration Company and to find daily updates, visit talonmetals.com.


FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.