Meet the company and the man at the helm of a property containing some of the world’s largest undeveloped resources of sulphide nickel and cobalt – battery metals that are instrumental in creating a clean, green global energy future.
Vancouver BC-based
Giga Metals Corp. (
TSX-V.GIGA,
OTCMKTS: HNCKF,
Forum) is engaged in the acquisition and exploration of mineral properties in Canada. The company is focused on two of the key metals used in the batteries of electric vehicles – nickel and cobalt. They are currently developing the Turnagain Nickel Deposit – a giant nickel sulphide deposit in north-central BC.
Stockhouse Media’s Dave Jackson was joined by company CEO Mark Jarvis to get our investor audience up-to-date with all things Giga Metals Corp.
(Click image to play video)
TRANSCRIPT BELOW:
SH: To start off with, can you tell us a little bit about yourself and the history of the company?
MJ : Well, I got involved with this company in 2004, believe it or not. I essentially took over the company because I liked what I saw which was the potential to develop an extremely large deposit. It's a very large, low grade sulphide nickel deposit that would be developed as an open pit mine. So very similar to the sort of very low grade but very profitable copper porphyry deposits that that we have so many of in British Columbia except the sulphide is nickel rather than copper. But a very similar model and I like large deposits, they're challenging but that's what I like and since I got involved in 2004, we've done a lot of drilling. We've defined an extremely large resource. We've done extensive metallurgy and engineering culminating in a PEA that was released earlier this year.
That models production of a nice clean high grade nickel, cobalt, concentrate averaging 18% nickel, 1% cobalt and we're looking at building something that would have a capacity of 37,000 tonnes per year of nickel which is giant, and it would have a mine life of 37 years. That's what the PEA describes. So it’s been a long time since 2004, but what I’m finding is right now things are really heating up. This whole electric vehicle revolution has given new life to nickel and to cobalt. It is a whole new demand source that is growing crazy bounds and we're finding that there's a lot of interest in our project right now.
SH: Can you update our investor audience and your Giga Metals shareholders on any new company developments, especially in the wake of COVID-19?
MJ: Oh, well it didn't affect us that much. We just worked remotely like a lot of people but right now we do have a drill program ongoing off of the property and so we're observing COVID protocols of course in camp and being very careful with how we conduct our business up there. This drill program, both drilling and other work is designed to collect the information we need to advance the engineering to the pre-feasibility level. So we're getting more detailed engineering on all sorts of different aspects of the project.
SH: You just launched trading on the O-T-C-Q-X Market in the U.S. Can you expand on this initiative for our investor audience?
MJ: Well the QX is about the senior tier of the OTC market in the United States and as a practical matter, what it means is that if you're on the QX, a US broker is allowed to recommend your stock to his or her clients and on the QB they're not allowed to. The QX is quite a desirable listing for that reason, and it just opens up a much wider audience and that's an audience, I think that is quite interested in electric vehicles and the whole supply chain for electric vehicles. So I think the US retail audience is a very desirable place to be for a company like ours.
SH: In a recent Stockhouse article, we detailed how Giga Metals is the new nickel play investors have been looking for. Can you explain to us how?
MJ: Well the sheer size of it and the fact that we're really focused on the battery supply chain, we see that as a critical and our peers in North America and specifically in Canada, other large low grade nickel deposits that are being developed are targeted at the ferronickel market. In other words they've done engineering studies that envisage selling to the stainless steel business, by supplying a mix of nickel and iron to the stainless steel business, but we're not focused on that at all, we could but we think that batteries are the future for nickel and so all of our engineering studies are done with that in mind. In fact, we recently announced that you know, whereas our PEA model production of a high grade concentrate, we have really good expertise in house and the nickel market in particular, our President Martin Vydra who used to sell nickel products, global products to end users when he worked at Sherritt (International) and what he says is that mixed hydroxide precipitate (MHP), he says that is the form of nickel for the future.
That’s what everybody in the battery supply chain wants this nickel and cobalt MHP. It’s a very pure form of nickel, and it’s easy to take MHP and process that into battery precursor minerals or battery precursor metals. So we are now looking at adding a step to our processing and this’ll probably be part of our next stage of engineering studies where we will produce a mixed hydroxide precipitate for sale to the market and the reason we’re looking at that is that the payables are much higher than you could expect to get from selling a concentrate to a smelter and so we think it’ll improve our economics by providing basically MHP producers right now, it’s flying off the shelf and its bought almost before almost before it’s produced. So and the demand is growing so strongly for that particular product that we think that’s the future.
SH: The Company looks set for strong growth in 2021, especially with nickel being such a key element in lithium-ion batteries. How are you placed to expand operations to meet the increasing demand?
MJ: Well in the mine development business, it’s all about money, isn’t it? Our main challenge is continuing to find enough money to develop a giant project. Every step of the way is expansion and so to meet that challenge we are in active conversations with a number of potential strategic partners. I can just tell you that we’re very interested in attracting investment at the project level rather than into our stock by the strategic investor because we think our market capitalization is much smaller than it should be and so project level investment is just simply better math for our shareholders, and I can tell you that there is real interest out there.
People are starting to figure out in the battery space and then the electric vehicle space that if they don’t have a long-term supply of nickel figured out that the Chinese are going to eat them alive because the Chinese have already figured this out and they are building and helping building these HPAL projects in places like Indonesia, Papua New Guinea, and so forth with very low environmental standards and they’re very carbon intensive sources of nickel but also these HPAL projects are not economic in Western terms. Like they might have an internal rate of return of 3 or 4% but the Chinese are thinking strategically, they’re not thinking like a Western company needs a 20% internal rate of return say to build something. The Chinese companies are happy with any kind of positive internal rate of return even if the capital takes 15 or 20 years to pay back, they’ve got a long-term supply of nickel at a predictable price which is the cost of production.
So they’re using extremely cheap capital to build these things and they’re securing their long-term supply with the intent of dominating the battery business and the electric vehicle business and they’re succeeding. So the Western companies are starting to wake up to this now and they’re thinking that they need to secure their long-term supplies. We’re getting calls out of the blue from people that I’m surprised that they’re calling us, and I don’t know exactly when something’s going to happen, but I really get the sense that the temperature is turning up as we speak.
SH: For company shareholders and potential investors, what kind of future development and progress can we expect at your 100-percent owned Turnagain property in Northern B.C.?
MJ: Well, we are doing a work program right now that is designed to collect the information, we need to advance engineering to the pre-feasibility level. So we’ll be working on metallurgy in engineering through the coming year. We’re hoping to have a prefeasibility ready by the third quarter of 2022. So that’s something to look forward to but again there’s all these wildcards. I mean, as I say, we’re talking to all sorts of people and maybe nothing happens for a while, maybe something will happen all of a sudden, it’ll be unpredictable, and I think things can get very interesting if we actually can pull something out of our hands with the strategics.
SH: What separates Giga Metals from the junior nickel mining competition and what makes your business model unique?
MJ: Well we’re not at this point looking for a deposit, we found a deposit, so we know what we’ve got. It’s all about engineering and creating value. So the world needs more nickel. We bought a very large deposit, 37,000 tonne per year facility for 37 years of mine life, that’s big but the other aspect of this is that we’ll be a low carbon producer of nickel and we’ve put quite a bit of money and manpower behind studying this. Our tailings can absorb CO2 directly from the atmosphere and so when you combine that with getting our power for the project from the BC hydro grid which is basically hydro-power so low carbon, in the future we would want to have an all electric mining fleet, that doesn't exist yet but I think the market's moving that way, and then when you combine that with the measurable type of CO2 sequestration that we've demonstrated from our tailings in conjunction with working at UBC we've got our very realistic goal of being a carbon neutral nickel mine. I think that does distinguish us from a lot of other you know mining companies and I think it's going to be important to the supply chain. People that buy electric vehicles want to feel like they're doing something good for the planet and if the raw material isn't going to those batteries are from extremely high carbon nickel for example well, that's not exactly saving the planet, is it? I think that that's an extremely important element of this whole story.
SH: Well it’s all about those three initials right now, isn’t Mark? ESG.
Yes, and you know, Canada has a very good reputation internationally for precisely those things [ESG]. I mean the environmental standards are very high, so it takes time and money to get your permits. However you can build mines in Canada and I'm wondering in the United States, whether you even can build mines anymore. Well in some states you can't, in some states it's very, very difficult but in Canada you can build mines. You just simply have to meet very rigorous environmental standards. So that's one thing that the international community likes is that they can feel good about the ethics of sourcing their metals in Canada. Also in British Columbia in particular we've got quite good relations with our First Nations and particularly where we are, we're dealing with the Kaska Dena, and the Tahltan and both of those nations are used to dealing with the mining business. There's a very vigorous mining culture in the North and frankly they're making a lot of money out of the mining business. It's open for business but that's all part of the social governance that people are concerned about in the supply chain.
SH: I have to mention your stock has had a very nice bump since late July…a nearly 30-percent increase in value in a relatively short span. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good buy right now?
MJ: Well, it's way too cheap in our view. We were at 35 cents I think, and we ran up to about 45 cents and I think we're back around 40 cents right now today. I know looking at a screen right now. So it took a bit of a bump and it's given some of that back. I just think that what's going to happen with this type of project, our market cap is roughly 30 or $35 million with this type of project is very, very leveraged to the price of nickel. Our theory is that nickel has to go higher, or new projects won't get built and so if you believe the electric vehicle story then a consequence of that is that nickel will have to go higher in order to bring on the amazing amount of new supply that's needed just for that business alone. It's estimated that 40 new large mines similar to the size of Turnagain will be needed by 2035 or so and that's a tall order and we'll just have to see how that goes.
SH: What’s the long-term strategy for the company moving into 2021 and beyond, and what should retail and institutional investors be looking out for?
MJ: Well again, it's all about the strategics as far as we're concerned. And that's something I can't predict the timing of, nobody can. But I just think this is a sort of investment that if you're looking to position nickel this is a very leveraged way to play it because if nickel goes higher, this type of project and the valuation goes much, much higher and it's got that kind of leverage and again, the critical events, the timing is not predictable. So I think what you do as an investor, what I do personally with this type of thing is I'll just buy for the long-term, I'll try and pick an entry point where I think the price is reasonable or cheap. I like cheap as an investor. I don't like it as a CEO of a company but as an investor I like cheap and I tend to accumulate stock myself and then wait because you don't know when the critical events are going to happen and when they happen it's usually too late to buy.
SH: Can you tell our audience a little bit about your corporate management and board teams, along with the experience and innovative ideas they bring to the nickel and cobalt mining space?
MJ: Well, I've already mentioned Martin Vydra, our president and he's the one that's in charge of our conversations with strategic because he knows them all. He's sold them nickel and cobalt in his previous incarnation as an executive at Sherritt International, which has a nickel and cobalt producer and has been for several decades now. Also someone very experienced in that area is our board member Robert Morris, before he joined our board, he was the senior executive at Vale, and he was in charge of worldwide sales of base metals for Vale. So copper nickel, cobalt you and precious metals but I mean Vale is one of the largest producers of nickel in the world and cobalt. So the portfolio that he was in charge of low wide depending on commodity prices range between 5 and $8 billion a year, he knows all the strategics extremely well. They know him and so in terms of building trust with a Japanese companies and Korean companies and Chinese companies, and in Western companies they all know Martin and they know Bob and they know that these are people that would only be involved with a quality company.
SH: And finally, Mark, if there’s anything I’ve overlooked please feel free to elaborate.
MJ: I think you've covered it very well. Thanks, Dave.
For regular updates, visit
gigametals.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.