- TSXv: CNC
- Shares Outstanding: 57M
- Share price C$0.47 (18.03.2020)
- Market Cap: C$27M
Interview with Mark Selby, CEO of Nickel Exploration company, Canada Nickel (TSXv: CNC).
Mark Selby has previously weighed in with his expertise on the nickel market. His general insights have been very informative for nickel investors, but now it is time to talk about Selby’s latest play in the nickel space. Canada Nickel Corp. is a relatively small nickel play in Canada. But it has a lot of the right parts that you would look for as an investor. It is Nickel sulphide. Potential for large scale resource and district-wide. Funded for next stage of operation. Looking to an accelerated delivery of a PFS. In a nickel bull market. Low share count.
After giving us the details on the recently concluded IPO, Selby gives us a look at what Canada Nickel Corp. has to offer for investors. On February 21, 2020, Canada Nickel completed a private placement and issued 3,074,333 Common Shares at a price of C$0.25 for aggregate gross proceeds of C$768,583. Canada Nickel Corp. has acquired 100% interest in the Crawford Nickel-Cobalt Project.
Selby has previously doubled down on Robert Friedland’s words: “nickel is the new gasoline.” Nickel demand is robust in the stainless steel industry, but a projected fresh surge of demand for batteries, courtesy of the EV revolution, has got investors across the board foaming at the mouth.
Selby indicates that the Crawford Ultramafic Complex (CUC) could have strong potential for developing a low-grade, large-tonnage nickel resource. In addition, the resource hosts nickel and/or cobalt bearing minerals and possesses promise for the extraction of these elements. In addition, Crawford has been assessed via magnetic, borehole geophysical, airborne helicopter magnetic and electromagnetic, and FALCON© Airborne Gravity Gradiometer surveys, and was investigated by its previous owners, Spruce Ridge, through diamond core drilling.
Now Canada Nickel has the available capital from its IPO, it will look to provide an accelerated investment opportunity for investors. Selby sees this as the start of a new nickel super-cycle and states there are only a handful of close-to-production projects than can help double nickel supply by 2030.
With the expertise of the management team, the existing infrastructure at Crawford, and the work Canada Nickel Corp has already done in the last 6 months or so, Selby is confident the company can surprise the market with the rate of returns and value growth, and he is likely to draw on much of the knowledge and experience acquired from RNC’s Dumont Nickel Project. Investors can expect confident, decisive, technical mining. However, they will be hoping Crawford can fulfill expectations.
The resource should be out soon. Will it “shock people” like Selby claims? When will Selby look to bring in financing from institutional investors, and is there a risk he could have to give a big portion of the company away? Selby is adamant he will make the right deal at the right time and will delay if necessary. He would rather wait for a better deal than rush into dilution for shareholders. How will this play out?
Are there any issues left to resolve? An MOU needs to be arranged with a local tribal council group, and then there needs to be six impact benefit statements/agreements before full construction of the nickel project. Selby is confident that once the PEA is signed, sealed and delivered, these shouldn’t be problematic to acquire. Investors need to decide if this nickel sulfide story excites them. If it does, it could be worth some serious consideration.
CLICK HERE to watch the full interview.
1:42 – Listing on the TSX: The Process of Going Public
4:55, 8:36 – New Deal, New Opportunities: What Have They Got and What Will They Do?
6:33 – Nickel Cycle: Have They Got the Timing Right?
11:51 – Business Model and Game Plan: What are People to Expect?
15:53 – Strategic Partners: Any Danger of Giving the Company Away?
18:46 – Share Breakdown and Company Strengths
19:37 – Outstanding Issues to Resolve
Matthew Gordon: Hello, Mark Selby. How are you, sir?
Mark Selby: Good, sir. How are you? It’s been a while.
Matthew Gordon: You’ve had your head down, because we spoke to you a few weeks ago now, and you’re in the process of getting Canada Nickel Corporation through the TSX and making it public. You’re there now. Must be pleased.
Mark Selby: Yeah, very happy just to start trading today. It’s been several months to get through this process. But, again, it’s a regulatory process so, it does take time but we’re glad to finally be there and that we can actually start talking about the story again, because there’s been lots going on in the project.
Matthew Gordon: You’ve got to tell me about this, OK because we usually speak to people when they’re public and they’ve been trading a while, or they’ve got their own issues and stuff. But we’ve started talking to pre-IPO, there’s a real process to go through. Give me an idea, give the people at home the sorts of things that you’ve kind of got to get through to be able to go public. What are the topics that the exchange wants to know about?
Mark Selby: Yeah. So again, I think with the transactions that we had, and again, it was just the nature of where the asset was. There were several degrees of difficulty that we had to kind of jump through. So, again, if you think of the majority of IPO’s it’s a single asset that’s been acquired from one company to another. It’s either an IPO or then an RTO transaction and that goes on. We first had to deal with the fact that we were consolidating a joint venture of a joint venture between two other small companies and then some private companies that don’t actually file any documentation. So, working through that in a regulatory process that likes things that fit into boxes and having stuff that doesn’t fit in any of those boxes was some additional work that we had to get through. And again, it’s really about they just want to make sure that you’ve got the financial resources that you say you do, that you own the asset and that you’ve got the capability to move it forward and deploy the capital that you’re raising to take it forward. So, again, on those parts of the process, again, we didn’t have any issues with that. It was just more that sort of that inherent complicated structure that we started with that didn’t fit into one of those typical regulatory boxes that caused some additional time, but as I said we’re glad to be finally here through that finish line. And then, again we should have a pretty steady series of news flow from this point.
Matthew Gordon: Okay. It’s interesting because there were three different parties and you had to get them to agree to the deal. And then you’ve got three different sets of data which you’ve kind of got to share or get in these boxes for the TSX and were you managing that process or was that all of you adding to the confusion, as it were?
Mark Selby: Oh, no, that’s it. Basically, you’ve got three general counsels. You’ve got three sets of auditors. You’ve got three sets lawyers. So, no it’s not a straight forward process, but it’s more than worth it.
Matthew Gordon: OK, let’s move away from admin hell. That’s my idea of hell. We always have people to do that so kudos to you for getting through that. Let’s talk about what you’ve got. Let’s give people a one-minute summary of the deal that you’ve put together and what you’ve got and then again, we’ll kind of remind people about what you’re going to try to do.
Mark Selby: Sure. We now own 100% of the Crawford Nickel Cobalt Project. Since September, we’ve continued to advance the project. So, we’ve been doing the drilling work that we need. We’ve been starting to do the mineralogy work that we need to do. And again, I think people are going to be surprised in terms of how far we’ve advanced this project already while we’ve been waiting to go public. And so, there’s going to be a very steady series of news flow over the next few weeks, which I think will really demonstrate the potential that we believe was there with Crawford to be truly one of the great nickel cobalt sulphide discoveries of this time, this decade and potentially beyond this decade.
Matthew Gordon: Well, I think it’s very timely. I look back to your RNC days with Dumont, it’s a great asset. But the timing wasn’t quite there, it’s 12 years in the making. It’d be one of those 12, 13-year over night successes. Your timing, nickel sulphide, obviously, is where you want to play. You’re going to, I assume, be able to tell us a little bit about what you think you’ve got now. But I’m interested in how you’re positioning this business in terms of getting the cycle right. Because we look at this, the wave of conversations we’ve had about market, it’s been phenomenal. The EV thematic, no one’s disputing that. It’s a question of timing that seems to be important. So, do you think you’ve timed it right?
Mark Selby: Oh, no. I think that the timing’s been perfect. As you said with RNC, with Dumont, I spent seven years promoting a project when nickel was out of favour. And again, we were setting up to deliver a nickel project for the next nickel cycle, which has now arrived. Our view is we need to double the supply of Nickel that we have right now by 20%/30%. And there’s only a handful of projects that are ready. So, to get something like Crawford ready for this next cycle, I think it’s perfectly timed. I think in terms of investors looking for sort of how far sentiment has shifted, you know, BHP Billiton for most of the prior decade was looking to sell their nickel business. Mike Henry in their annual report, basically said we need more future facing metals, we need more nickel and we need more copper. So, if the biggest mining company has done a 180, I can assure you that the management teams of every one of the other large mining companies is doing this, has a similar view and has a similar take now on getting exposure to battery metals. And so, again, having a large-scale potential asset like Crawford in a jurisdiction like Ontario, where in the Timmins camp, where the mines have been permitted on a relatively straightforward basis, I think the timing of this couldn’t be better. And again, there are some other nickel sulphide opportunities we’re looking at because, again, I think our team spent a lot of time looking at nickel sulphide when no one else did. So, we think we’ve got a leg up on the rest of the competition in identifying those assets that are going to be able to deliver the nickel the EV market needs by the end of this decade.
Matthew Gordon: Okay. Interesting. We spoke with Anthony Milewski last week and we put a piece out at the weekend. He was quite complimentary of what you’ve got, and people perhaps should take a look at the interview and get his take on what you’ve got. What do you know about what you’ve got today? And then what are you going to do with it? And how do you pay for that? Because, again, there’s so many exploration plays which just aren’t able to get the funding in place. I mean, you’ve just listed, you got some cash now. What are you going to do with that cash?
Mark Selby: Yeah. So, again, I think the key thing is here, because we’ve got that experience, we’re going to be able to accelerate the process and advance the process in a much more timely and cost effective manner than we were, because Crawford is basically a very similar asset to Dumont with its own unique set of strengths. So, with the money that we’ve raised, we’ll have a resource out here very, very shortly, which I think will shock people in terms of just the scale of the resource that we’ve been all ready to drill with a few million dollars that we’ve raised to date. And, again, I think as we take this forward, we’ll be able to highlight what I think this resource will show, what the potential of this property is. We’ve only drilled off 15% to 20% of what we have at Crawford. And so, I think the highlight of that scale potential will be there. I think the what we’ve been able to deliver for the cash that we’ve invested to date will make it easier for the next set of investors to bring that next round of money that we need. And again, given our experience with Dumont, we’ll be able to quickly advance Crawford into the resource we have now, into a PEA and then look to basically build out the other 85% of the property that we haven’t drilled yet.
Matthew Gordon: Right. But what’s the game plan here? You’re using great words. So, it accelerated in value and all of wonderful things, which lots of people do. But I need to understand what that actually means. So, you’re going to deliver a resource which you’re saying gives you the scale and you’ve told me before scale…
Mark Selby: We’re going to deliver a real resource that I think will surprise a lot of people when they see it next week. And that resource on its own will be large enough to help support moving and what we’ve seen to date will allow us to move right into a PEA on that resource itself. We still have 85% of the property that we haven’t explored yet. And so, again, now that we understand what the best part of what we’ve drilled off already, we know there are other pieces on the property that we’re going to be able to find. There’s a good chance we’re going to find similar good stuff in other parts of the property to make it even larger than what we have right now. And I think the key thing in this market and again, to point to investors in generally investing right now, the market is really bifurcated into two categories of assets. So, if you own a world scale asset that the majors want to buy and again, there’s companies in Colombia and Ecuador that have found a new range of copper, copper gold elephants, those stocks have traded well. And then there’s everybody else. And so, what we really want to show with this first resource is that we’re in elephant country and that we’re hopefully going to find a bunch of elephants on this property and have something that I think will be interesting to large mining companies, to large EV players and to large suppliers that this is exactly the kind of nickel, cobalt resource that we’re looking to help build their business.
Matthew Gordon: Ok. So, this is the bit that interests me is the model, I need to understand the model. So, you’ve got some money, you will deliver a resource next week. You hope that will have an impact on the share price and also get people to notice that you’re here because there are not too many of these around. I get that. I want you to help me understand what people are getting into. What will investors get into? Will it be just a long series of diluted raises to get you where you need to be? How do you assure people that they’re not in for a long, drawn out process? And how quickly are you going to deliver your plan when you do either hand it over to a big strategic who actually goes and puts the money in for this? Or you bring in the strategic partners who again, coming in at asset level and not diluting people in the public company?
Mark Selby: Again, we will be out to raise the next set of money for the PEA, that’s the next stage that we need to get through. And, we will be looking to bring a strategic in at that point in time, if the pricing makes sense. And again, we’ve already had some interest on that front. I think the key thing from here is we’re going to advance in towards that, get that PEA done, and then from there we’ll be able to move right into a feasibility study. The key thing from it from a managing a process perspective is that you need to have some, and communicate to the market, very clear milestones that you are able to move quickly, because if you can’t demonstrate to the market that you’re going to move quickly, then the large mining companies suffer from inertia issues. And so, they’ll never quite get around to making you that investment. But if it’s very clear that if they don’t step up today or they don’t step up in three months, or they don’t step up in six months, we’re going to be moving the ball, to use a sports analogy, moving the ball very quickly down the field, and they’re going to find themselves chasing a valuation, which is hopefully going to be improving materially as we move forward here.
Matthew Gordon: Okay. But let’s come back to what some of those deliverables are, because again a lot of companies use these phrases. And I want to separate the cliché from actual delivery. But what are the moments, what do they mean for you?
Mark Selby: Yeah. First resource out very soon, PEA out by the end of September. Worst case, end of October. Feasibility study out before the end of 2021. That’s about as fast as you can advance a project today. We’re already assembling the PEA team in place again with experience with Dumont, that we’re going to be able to bring that knowledge and experience to bear and be able to quickly advance the project going forward.
Matthew Gordon: Okay. And clearly, each of those deliverables, you hope there’s a bump in the price and you’re able to raise money more cheaply this time? So, there’s not a long-diluted process here and there’s not a lot of money to get to feasibility. Is that what you’re saying to me?
Mark Selby: Yes, very much so. So, again, I think when this resource comes out in the coming week, people will be surprised at just how many tons of nickel we’ve delivered for how few exploration dollars at this point. The benefit of these large-scale low-grade deposits is we’re not drilling lots of 500-meter holes to hit 10-meter gold veins. We’re drilling a 500-meter hole, of which 450-meters of that end up in assays that you can use in a model. Again, because the deposit doesn’t twist and turn and then get faulted in 50 different directions, you can use much wider drill spacing to define the resource that you’re using. So, both of those things help to be able to define a very large resource very quickly.
Matthew Gordon: Right. So, I’m going to ask a maybe difficult question which is you talk about getting a strategic in, around the PE stage and if I look back at Dumont, Waterton came in there, RNC gave away, what, 78% of the company and how although it is a fantastic asset and it’s worth a lot of money on the balance sheet, or could be worth a lot money on the balance sheet for RNC. If you bring in strategics too early, are you in danger of giving away the company or do you think you can negotiate a sensible, reasonable position?
Mark Selby: The key thing is and again, when we did the Waterton deal, it wasn’t really around any issue per say with Dumont. A key portion of that deal was to set up a joint venture fund to look to acquire other nickel sulphide assets in time in a market where no one else was buying them. So, unfortunately, Cobalt 27 and Mr. Milewski came along about two months after we announced the deal. So, people we had been talking with for several years who were getting to the point of capitulating, if somebody shows up with a cheque, you can have my nickel sulphide asset. I think, if Cobalt 27 hadn’t come along, we would have gotten a couple of those deals done. And I think that’s sort of logic of that transaction would have been much clearer to a lot of people at that time. So, that would have allowed us to have a whole portfolio, of nickel sulphide assets that the smaller, easier, cheaper restarts, complementing the much larger large-scale asset is key. And again, to your point as well, in terms of too early and giving away too much, this is a time in the market where, if BHP is already talking about more nickel, I can assure you that Rio Tinto and Anglo American and all the others are also talking about more nickel. And there’s really very few ways to play it. So, I have most of my net worth invested in this company. If you see, when I was at RNC, I was buying the stock all the way along through the ups and downs. And again, here, I’ve taken a bunch of that money and put it into this company. So, I will do the right deal at the right time. And again, if it means we have to wait a few months, I’m not going to build it for the sake of building it. I think some other mining companies have done sort of full financing package deals where there’s a massive amount of dilution. Yes, you’re going to get your project built but how will your equity holders actually ever going to make any money off this thing? Because you’ve basically diluted their ownership interest in the project, you’ve issued a huge amount of equity relative to your current base. So, it’s going to be challenging for people to actually get a return on their shareholder value. You as management are great because you now can build your projects, you’re going to get your pay checks for three or four years, but your equity holders really are going to make any money.
Matthew Gordon: Right. So, you’re cognizant of that point, that issue and that’s a consideration.
Mark Selby: Yes, very much so.
Matthew Gordon: OK. So, how much do the management team own of the company?
Mark Selby: I personally own 4%, my family own another 5%, and the management team as a whole has over 10% of the company. I think that’s one of the other strengths with this company, too, is, again, as a brand-new company, we’ve got 57M shares outstanding. There are no warrants. And there’s a core group of individuals who spotted this opportunity, initially drilled those four holes in 2018 and are committed to seeing this through until we basically deliver what we think will be a great nickel cobalt sulphide project for the world.
Matthew Gordon: Okay. So, I know you’re in a great part of the world, the infrastructures there. You’re good. I’m not going to get into that yet. Have you got any outstanding issues with regards to permitting or First Nations or any liabilities, obligations which you’re still trying to resolve as part of this three-way triumvirate negotiation?
Mark Selby: Yeah, the one thing that’s been a real strength of this area is that Noble Minerals, one of the first thing they did, they were the original property holder, they have they had an MOU in place with the local group of First Nations, Wabun Tribal Council, who’ve been great to deal with them since we’ve now moved into the relationship. And we’ll have an MOU with them shortly for the property. They have six impact benefit agreements in place, which is what you’re going to need to have when you go to build the project. And again, once we kick off the PEA, we’ll be looking to start to advance that impact benefits agreement in place to make sure that it doesn’t become a bottleneck on the timeline going forward.
Matthew Gordon: Okay. Mark, I just wanted to catch up. I know you’ve got a busy day. The bell has rung as it were. I hope people at least have a look at this. It’s certainly a very exciting area to be playing in. Nickel sulphide is very, very topical. We got a lot of questions. And thank you, you did that series for us as well, and Anthony Milewski’ s followed up last week and reinforced what you said with regards to winners and losers and red flags and things to look for. So good luck with it. When the resource number is ready, please call us or we’ll call you and let us know because you seem quite excited by this scale.
Mark Selby: Yes.
Matthew Gordon: Congratulations on your new company. We wish you well. Let us know how you get on.
Mark Selby: Thank you, Matthew. We’ll be in touch soon for sure.
If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.
Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.