Canada Nickel (CNC) – High-Grade adds more Excitement to Bulk Production Story

Canada Nickel Co Inc.
  • TSX-V: CNC
  • Shares Outstanding: 57M
  • Share price C$0.93 (02.07.2020)
  • Market Cap: C$52M

Interview with Mark Selby, CEO of Canada Nickel (TSX-V: CNC).

The difference between good investing and great investing is timing.

The Canada Nickel story has impressed us so far. In just 6-months, nickel-veteran Selby turned the Crawford Nickel-Cobalt-Palladium Project into the 11th largest nickel sulphide resource globally: it has the scale that potential strategic partners will demand. The market responded, with the share price tripling in just over a month. Now, things have settled down a little, with the share price stabilising around C$1.

Selby has been involved with nickel for decades, becoming involved in nickel mining in 2001 as the head of commodity research at Inco. He joined RNC Minerals in 2010 and took the Dumont Nickel Project from an early-stage resource to a fully-permitted construction-ready, bulk-tonnage, low-grade sulphide project. Crawford is extremely similar to Dumont. All of Selby’s learnings and investment at Dumont is now being leveraged to advance Crawford in a more cost-effective accelerated timescale.

Matthew Gordon talks to Mark Selby, 30th June 2020

The EV revolution narrative has taken a hit to short-term demand and prices, but many commentators claim the long-term growth has actually been accelerated by COVID-19. Government subsidies are being discussed and implemented much more aggressively and much sooner than might have been expected.

Nickel is positioned extremely favourably. The fundamental demand that underpins the commodity is stainless steel, but nickel’s status as the largest metal by mass in the cathode of the EV batteries that will power tomorrow is the primary source of growth-related excitement. Indonesia is a big source of nickel supply, but if investors are to step back and look at the macro picture, a significant supply/demand deficit becomes apparent. As Selby remarks, there are “nowhere near enough” nickel projects in the pipeline right now. Moreover, the industrially useful by-product, palladium, and cobalt help make Crawford even more economic.

Ontario is a great mining jurisdiction with a favourable permitting process, and Selby is confident he can time the development of Crawford to hit the next nickel super cycle. Moreover, the great existing mining infrastructure in the region will cut costs and make investors even more optimistic. The community and first nations in the area have historically been very supportive of mining operations.

Canada Nickel commenced its PEA for Crawford in early-June, and there have recently been some drill results for both the East Zone and the higher-grade core in the Main Zone.

East Zone

  1. Multiple holes extend the PGM mineralization, up and downdip, on the East Zone. They exhibit a consistent grade and thickness.
  2. 1.8 g/t palladium + platinum over 4.5m core length in one hole.
  3. 2.0 g/t palladium + platinum over 3.0m core length in one hole.
  4. There are multiple intersections of nickel mineralization with more than 250m core length with a higher grade interval of 0.37% nickel and 0.3 g/t palladium + platinum over 33m core length, which is consistent with a nearby intersection.

Main Zone

  1. The first infill hole on the Main Zone has returned 0.42% nickel over 306m starting at 43m, including 0.51% nickel over 27m starting at 304m.
  2. In its entirety, the hole returned 0.40% nickel, 0.017% cobalt, 0.05 g/t PGM over 361m within the higher-grade core (which varies in true thickness from 40 to 160 m).

So, what do these numbers tell us? The potential for a higher-grade core, initially suspected when the first 4 holes were drilled, has been confirmed. It’s around 15% higher-grade than the average seen at nickel projects like Dumont. Within that, some even higher-grade shelves returned 96Mt at 0.34% nickel, and 28Mt at 0.38% that come “right up to surface.” This higher-grade zone provides Canada Nickel with a unique advantage: incremental free cash flow. This should minimise post-production dilution as much as possible.

In the last few weeks, Canada Nickel announced that it had picked up options on 5 other land packages that have “similar ultramafic” potential. Selby thinks it is about exploring the potential for multiple bulk-tonnage deposits in a large district. The company has locked up what it feels are the best targets in the region. The geophysics has been key to identifying areas with a potentially higher grade.

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Selby expects to deliver a Feasibility Study by the end of 2021, and to be in production by 2025. This is an aggressive, exciting timescale and could offer accelerated returns for astute nickel investors.

Canada Nickel has sufficient cash to complete the Scoping Study by the end of 2020, but it will need to raise between C$10-20M for the Feasibility Study. This will be raised sometime between now and year-end. The key aim is to introduce a strategic investor or large mining fund. Those onbound conversations are already well under way. The shareholder base is predominantly retail. No major mining funds are currently involved in this story, meaning there could be some serious upside that hasn’t been tapped into just yet. There is plenty of room to grow.

We look forward to the news flow during 2020. Selby has learnt from some of the mistakes he made with Dumont, and he is now focussed on hitting deliverables and adding value for shareholders. Let’s keep a close eye on this story. It could be about to get really exciting for EV/nickel investors.

What do you make of Canada Nickel?

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