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A Canadian Miner Ready to Meet the Nickel Demand

Stockhouse Editorial
0 Comments| October 28, 2020

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Advancing the next generation of nickel-cobalt sulphide projects is Canada Nickel Company Inc. (TSX-V: CNC, OTCQB: CNIKF, Forum).

There is a demand for nickel and cobalt to feed the growth of the electric vehicle and stainless-steel markets. The Company’s flagship Crawford Nickel-Cobalt Sulphide Project is located in the heart of the prolific Timmins - Cochrane mining camp, where the Company released the final results from infill drilling at the Main Zone earlier this month.

We are joined by Canada Nickel’s Chief Executive Officer Mark Selby to find out more ….


SH: Thank you for joining us. To begin, let's find out about your recent to resource upgrade.

MS: Yeah, I know it's very exciting. So, we put out our first resource at the end of February, just as we were going public. And at that point we're already one of the 12 largest nickel sulfide resources globally with a total in all categories of just over 2 million tons of contained nickel and most with, with a higher-grade core. This last resource update had really two main objectives and we sure shot the lights out on both of those objectives. First was in terms of increasing the overall scale of the resource, which we did.

So, we're now well over 3 million tons and well into the list of the top 10, a nickel sulfide resources globally. And then the second thing, and this leads into, you know, a key thing for our PA or preliminary economic assessment, which we expect to complete at the end of the December is focusing on upgrading and increasing the size of the higher grade core of the ore body.

And we did that very, very well. So, we had before 96 million tons in this high-grade corridor about 0.3, 4% nickel. We've now more than doubled that to over 200 million tons, you know, at 0.3, 4% nickel, which is about a one third higher than our average grade. You know, why that's so important is that, you know, when you build a large-scale mining project of which, you know, we hope Crawford will be one day. If you're able to fill that mill with three, five, seven years of higher-grade material, particularly one third higher grade, your costs are fixed. So, all that incremental grade comes through as incremental cashflow in the project. And that's why this project was just discovered just over two years ago, we took it over a year ago and started drilling at that point. And so the reason we're going right into a PA, which you expect to have done by the end of the year is to be able to really demonstrate the economics of what we think we've got here.

SH: Everyone's talking about it. So, in your opinion, why is now a good for nickel?

MS: The key thing with nickel is it's always been a very high growth metal. If you look historically, it's grown at four to 5% a year, which is about double the growth rate that you've seen in, in copper and zinc. And that's been driven primarily by the growth in the stainless-steel markets today. You know, obviously there was a, the Tesla battery day presentation and, and the focus on electric vehicles, you know, and, and the great thing about that Tesla battery day presentation has really highlighted sort of what an important role nickel will have in being a key metal to deliver the batteries that the electric vehicle revolution is founded on. Robert Friedland summed it up pretty nicely. Now, when he called Nickel “The new gasoline” for cars. It's going to be the key ingredient in terms of powering cars going forward.

To be able to develop a new, new nickel sulfide project, which there are very few of these days is we think exceptionally well timed in the market where you have a great investment return are when you a have a great project, but then you're able to deliver a great project, you know, during a very promising market timeframe. And we really think, you know, we're in a very interesting, you know, nickel period right now, and nickel goes through super cycles, you know, every 15 to 20 years because of this high growth demand or supply struggles to catch up for a few years, we went through one in the late sixties.
We went through another one in the late eighties and another one in the mid 2000’s. Given this extra overlay of nickel demand from electric. So on top of already strong demand growth from the stainless-steel market, we think being able to advance Crawford, to be in a position to start delivering nickel, by some time in the middle part of this decade, we think will be very, very well done.

SH: Speaking of Tesla, Elon Musk, publicly asked mining companies this past summer to mine more nickel and even took notice of your company on Twitter.

MS: He talked about it on his quarterly results call the end of July. And what was interesting is, is he made a couple points. One was, you know, miners, please make more nickel. And then two, please do it in an environmentally friendly and environmentally sensitive way. So, and it really highlighted two things. One is there's very few new nickel projects outside of vendor in Asia. And so, for European and North American automakers to have local sources of supply, there's very few places they can go to be able to get that. So, a new nickel project like ours in a place like Timmins with all the infrastructure in place and in Canada is a big advantage. The second thing is around that environment, like friendly environmentally sensitive way through the challenge with, with nickel supply from Indonesia is the bulk of it's been, you know, more than 100% of the growth in supply over the last five years and will be very important if not the bulk of supply growth over the next five years, but because it's a type of nickel that is extremely energy intensive, so you need a lot of electricity to process it.

It's unfortunately in areas where there's, there's very little renewable energy. And so as a result, they end up burning 25 to 30 tons of coal per ton of nickel to be able to produce the nickel that they do that obviously creates, you know, 85 to 90 tons of CO2 emissions per ton of nickel, you know, and I'm pretty sure you'll on Musk when he decided to embark on the electric vehicle revolution was on key wasn't keen on strapping, you know, a pile of CO2 in the battery pack into every car that he's going to produce. So, we're in the very, very fortunate position with our deposit. And we created a, what we call it, we've called is our net zero metal subsidiary. We have a unique set of costs and unique set of circumstances that we believe will allow us to, to deliver net zero carbon nickel to the market, which we think will be in demand.

One is the host rock that makes up the bulk of the mineralization of our deposit is made up of a mineral that when it's exposed to air, it naturally absorbed CO2. It is as a way to soak up CO2. The second thing is we're in an area that is all hydroelectric based, which is zero carbon. And so all the electricity that we need to do the mining and the milling part of our process will be all zero carbon hydroelectricity, you know, and the third, the third part of it is Timmins is an area that's very supportive of downstream processing. And so the ability to, to co-locate some processing plants in close proximity to our tailings and waste rock, where we can capture the off gas and route it and capture all the CO2 is the unique combination of those three things will allow us to be, we believe, that a net-zero carbon producer going forward, which all consumers are interested in, and going forward … even more.

SH: Let’s find out a little bit more about you for investors who are new to your story. Canada nickel hasn't been around very long but has already made a big impression.

MS: We formed the company literally just over a year ago, the deposit had had four holes drilled in the prior 12 months. And from those, I saw that there was the potential for a very large nickel deposit, similar to a project I had advanced in a past life. We formed the company privately last September, we raised $6 million. We completed the initial resource in just six months where it was already one of the 12 largest sulphide deposits globally since raised subsequent capital, to be able to allow her, to allow us to deliver this most recent a resource upgrade, which again took the scale of the resource up by another 50%. But most importantly doubled the size of that high-grade core, which we think is going to be the key piece from a value perspective. We're going to continue to advance it aggressively. So, we'll have a PA in place by year end, we'll have a feasibility study done by the end of 2021. And again, you know, we're pushing this hard, because of our experience, which allows us to be able to do it. And then secondly, we, you know, we want to be in a position to be able to deliver that nickel for what we think is going to be a very exciting nickel market. Come the middle part of this decade.

SH: You mentioned the potential of being an environmentally friendly mining Company that can produce nickel with zero carbon emissions. Can you tell us more?

There was the combination of the host rock that hosts our deposit is made up of a mineral that naturally absorbs CO2 when it's exposed to air, but you can Google carbon sequestration using ultra may rocks, you know, by, by mining the material, we'll be able to create material that will absorb CO2 and, you know, create carbon offsets for us. The second part is the, you know, the electricity in the region, use for the mining and milling, there's all zero carbon hydroelectricity, and then we'll have process plants locally where we'll look at capturing the off gas from those plants and rewriting those out to our tailings to be able to produce what we believe will be the first net zero carbon, you know, nickel, cobalt, and iron

SH: On nickel being cyclical. Global demand is surging. What are your thoughts on this? Where is the market today? And where is it headed?

MS: Those similar growth rates in the use of stainless steel, which is new consumes about two thirds of, of overall nickel consumption. What's interesting, again, is, you know, the expose of growth that's expected from the electrical vehicle sector. So when you overlay that on top of the already strong growth from the stainless steel market, you know, we expect that you're going to have to double nickel supply by 2030 versus, you know, what was produced in 2018. Outside of Indonesia, there's very few projects that are ready. And so again, we think we're in a very fortunate position that we're going to be one of the few nickel projects out to be able to deliver large quantities of nickel, you know, in what we think is going to be very, very attractive nickel market by the middle part of this decade.

SH: We've been speaking with Mark Selby, CEO of Canada nickel company, creating on the TSX venture exchange under the symbol CNC. One of the few Canadian miners ready to meet the accelerating demand for battery metals, as the EV revolution gathered speed. Investors are reminded to do their own due diligence before making any investment decision. Thank you for listening.

To download the episode, click here.

FULL DISCLOSURE: Canada Nickel Company Inc. is a client of Stockhouse Publishing.

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