Mark Selby – Is Nickel On The Comeback Trail? (Transcript)

Canada Nickel Co Inc
  • TSX-V: CNC
  • Shares Outstanding: 68M
  • Share price C$1.15 (29.05.2020)
  • Market Cap: C$81M

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

Following on from our recent interview to discuss his blossoming nickel exploration and development company, Selby is back to discuss the state of the nickel market.

First up, what is Selby’s take on the global metals markets? Has the market bottomed out? He thinks in China the market has reached the bottom, based on various metrics. The latest data in China for copper, the largest metal by market volume, has seen the premium of the price in China at 18-month+ highs. Selby likes to use copper concentrate terms as a reference point for the wider market, because at these “inflexion points;” the Chinese decide that the copper price is low and try to obtain as much as possible in any form: cathodes, concentrates, scrap etc. They just want copper on the way at today’s price. Copper concentrate terms are currently at “multi-year lows.” Time to get excited? Is this a sign to make metals investors feel bullish? There are significant Year-On-Year (YoY)increases in imports for a “bunch of materials.”

What strategy will the Chinese government adopt? Play catch up with production or carry on as usual? Selby states that, based on several metrics, the Chinese government is trying to drive metal production via infrastructure and construction spending. 6-weeks ago, cables producers that feed this supply chain have been up over 100% of capacity. Anecdotally, he says that excavator sales are up 60% Year-On-Year. There is clearly a “big shove” happening to get the Chinese economy going again.

This is great for copper, but what about metals with different supply dynamics. He states that while speculation on a several hundred thousand tonnes of copper might be possible, it won’t happen for bulk metals. Iron ore imports have been “rocketing” into China, and iron ore prices are at “very, very, very solid levels.” The fact we are witnessing this sort of market behaviour in copper, bulk metals and in other economic indicators, this helps confirm that we are back on the way up. For nickel, Selby claims stainless prices are up year over year. Stainless steel inventories have come down a little bit, but they still have quite some way to go. In terms of a specific positive indicator for nickel, we are observing the price discount between nickel pig iron produced in China and nickel has closed a lot. On the supply side, all of the mines in the Philippines have been shut down, which has massively hampered nickel supply. We are seeing ore imports on the ground hitting multi-year lows in China.

Investors are now coming into the nickel space as evidenced by Canada Nickel’s rising share price. Selby is hoping to capitalise on this with a U.S. listing for Canada Nickel: this is something that is definitely on the cards in the not-so-distant future.

We Discuss:

  1. China’s Number Announcement: Situation of the Metals Markets
  2. Catch Up vs Stay at Normal Levels: Chinese Government Decisions
  3. Looking for Clues in Copper, Base and Bulk Metals: Where are These Markets Going?
  4. Nickel Might See Some Blue Sky: Investors are Coming Back?
  5. Canada Nickel: Listing in the US?

CLICK HERE to watch the full interview.

Matthew Gordon: Hey Mark. How are you doing?

Mark Selby: Great, Matthew. Good to see you again. 

Matthew Gordon: A long time – it has been days. I don’t see you for months and then you show up.

Mark Selby: Bang, bang. There you go.

Matthew Gordon: Fantastic. Good. I’m glad that I’m talking to you because I wanted to catch up on something that we talked about a few weeks ago, which was trying to identify bottoms; bottoms of the market and how you went about doing that. And I know we started a conversation, we said we’d kind of pick up again because the market has been through a few waves, which we talked about, I think way back when, in December about the scrap market being influential about Nickel, but then we’ve obviously had a few market movements as well. So, what’s your take on this with regards to the metals market at the moment? Have we reached the bottom?

Mark Selby: Yes, I think in China, I think we have, based on the various metrics. If you go back to the discussion we had earlier, I talked about a bunch of market premium type information that’s there, taking a look at changes in pricing for very metal and various forms and how that’s stacking up. And then 3, in terms of,  what’s happening in the scrap market, that’s there. So, yeah, no, the latest sort of data over China over the last month or so, Copper is always the biggest metal so obviously that is a good indicator. And so you see, the arbitrage –  the premium of the price in China versus outside of China, so there’s an incentive to import material into China; is that 18-months plus highs?

The one that I always like to see is Copper concentrate terms because what happens at, again, at these inflection points, both top and bottom, we’re talking about a bottom here, the Chinese just decide that Copper is cheap at this price and I think the price is going to go higher, so I just want to grab Copper in whatever form it’s in: cathode, concentrate, scrap, whatever. I just want Copper units on my way, priced at today’s price, and if they get delivered in a month, two months, four months, I hopefully am going to sell that at a great big profit. And so, Copper concentrate terms again are at multi-year lows. So that is a real sign that sort of the buy is on right now.

Another; the Chinese import data for the month of April came in and you see stuff, again, given how brutal things were in February, March, you’re going to see month over month increases. But we’re actually seeing significant year over year increases in imports in a bunch of materials as well.

Matthew Gordon: But that’s them playing catch up, right? All that’s telling us is that they’re playing catch up because not much was happening for a while. So, what do you think the government is instructing Chinese companies to do now? Play catch up or just run along the normal levels here? I mean, because we have been talking to Uranium companies and we have looked at some of the big producers there, they’re saying they’re not going to play catch up, they’re just going to continue at the rates they were pre-COVID, et cetera. So, have you any insight as to what is happening in China?

Mark Selby: Yes, I mean, again, in China, every recession, 2001, 2003, 2008, and slow-down in the middle part of the last year, one of the big levers is just in terms of infrastructure and construction spending; they are sort of the 2 key metrics. There is no one state grid. I mean, the state grid company of China uses a significant portion of the world Copper supply. It’s a pretty crazy percent, I can’t remember exactly what it is, but it’s much larger than most countries in the world, I think, except for China – just with 1 company. But 6-weeks ago producers in China who produce the cables and so forth, that sort of feed that supply chain for state grid, were up over a 100% of capacity at that time.

There are some other metrics that commodity analysts look at, and again, I would encourage people to go and read as many different commodity analysts, because they each, a lot of people have their ‘favourite indicator’. So, one that I’ve seen a couple of times and much like, is excavators, right? You’re not going to speculate on excavators. It is used very broadly. And excavator sales are up 60% year over year in April. So that’s a pretty good sign that there’s a big shove happening to get the economy going from the government in China.

Matthew Gordon: Okay. So, that is great for China, like I said, that’s great for Copper, but are there other metals which will give us clues as to what’s going on, like say bulks for instance. I mean, what’s happening there?

Mark Selby: That’s a very good point. Again, you have to be careful not to just look at one metal because the supply dynamics of that specific metal might be influencing what’s going on. But one of the things I always like to check to see what’s going on is, is if you see a few base metals moving and then you see the bulks moving, because again, it’s easy to speculate on a few thousand tons of Copper and shove it in the warehouse somewhere, but you’re not going to speculate on a 200,000t iron ore shipment and think about storing that for three or four months. So, iron ore imports have been rocketing into China. And so, iron ore prices, again, are at very, very, very solid levels. So, the fact that you’re seeing this in Copper, seeing this in the bulks and then you’re seeing these other economic indicators, you were talking about excavator sales and so forth, I think that really helps confirm that we’re on our way up here.

Matthew Gordon: And what do you think that means for Nickel?

Mark Selby:  I think that the nice thing is, in terms of Nickel, we’re seeing the same sort of things happen. So, stainless prices are up 10% year over year, even though stockpiles again, we talked earlier about Nickel, about how prices were way too high and had to correct. And we’re going to be along the bottom here is a stainless inventories have built up quite a bit in China as we fell down that price. Inventories have come down a bit. They still have a way to go. We’ll see, maybe by the end of the May, we’re a long way back to where we were because stainless prices are already up 10% off the bottom. So that’s a pretty good sign. Again, they’re seeing their order books come in. If they’re already lifting prices with a bunch of inventory on the stainless steel side, still sitting around.

In terms of Nickel metal specifically, what we’re seeing is the discount in China between the Nickel pig iron produced there and Nickel has closed quite a bit. The R that I talked about in Copper is not quite open yet, but it looks like it’s heading in that direction. And then very importantly on the supply side, one of the things, because I had talked before, initially back in September, that we’re going to have a July, August turn and then post-COVID I said, okay, it’s off to year-end. But it might actually be coming back in towards maybe September, October now.

Another thing is that Indonesia banned ore exports in January 2020, that was going to cause stockpiles to shrink. Well, COVID has basically shut down all of the mines in the Philippines, which are sort of the replacement source for some of what Indonesia was shipping. So, we’re seeing ore imports on the ground in China, again, approach multi-year lows. So, that’s really setting up for that supply squeeze within China. Now, Indonesia’s growth there is up by 50% or more in terms of Nickel, pig iron, coming out of China so that’s offsetting some of the gap. But it looks like things will be tightening up, definitely in the second half. So, I am quite keen to see that coming down the pipeline for Nickel.

Matthew Gordon: Yes. That’s fantastic. I mean, that’s very good news for Nickel, but what do you think it means for investors? You had said, okay, this may be a few months out here, but now with what’s happening in the market are you seeing Nickel investors coming back in? I know you at Canada Nickel, your share price has tripled and it’s all good news for you, but what about some of the other bigger players, are they seeing a renewed interest in the market?

Mark Selby: I don’t know in terms of how the equities have yet to respond to that. Again, prices of commodities have come up off the bottom. But the thing I would encourage investors is, is again, when you have these turns, they don’t happen gradually and you kind of think, Oh, I’ll maybe pick some up next week or in two weeks, or I’ll gradually get back in. You always have a short covering that happens at the bottom and you end up with these, all of a sudden you wake up and copper prices are up 15% or 20% or 25%, and the liquid copper equities have started to move pretty dramatically. And again, in any market turn, it’s going to be the most liquid names that go first and then it starts trickling down. So, in terms of your junior Explorer at this point in time, you still have to sort of trickle down that pipeline. But it’s when you start to see these signs, start to get ready and then watch if you can start to see that cascade happening down towards whatever type of companies you invest in.

Matthew Gordon: Perfect. Can I just ask you very quickly, I know we spoke at the beginning of the week about Canada Nickel, but we’ve had such a good response to that, and some of the questions that came back was, is there going to be a US listing?

Mark Selby: Yes, we’re definitely, that’s the next listing that we want to get done. So, we will work to get a full OTC QX listing, because I know that makes it easy for US brokers to trade the stock for their clients and so forth. So yes, that’s definitely coming down the pipe. And we’ll get back to you and let you know as soon as it’s ready to go.

Matthew Gordon: Okay. Well, watch this space, and look, Mike, thanks very much for coming on and answering some these questions. It helps us to get back to, the viewers and followers of the show, who are always quite engaged when it comes to Nickel so, I appreciate your time and hopefully I’ll see you soon.

Mark Selby: Yes. Most definitely, Matt. Take care.

Check out another interview with Selby here.

Company Website: https://canadanickel.com/

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.

Canada Nickel (TSX-V: CNC) – The 11th Largest Nickel Sulphide Resource Globally In Just 6-Months

Canada Nickel
  • TSX-V: CNC
  • Shares Outstanding: 67M
  • Share price C$1.33 (22.05.2020)
  • Market Cap: C$87M

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

Nickel could offer battery metals/EV investors a massive upside. Mark Selby has a history of success in the nickel space that extends back to his time at Inco and RNC.

In just 6 months, for just US$4M, Canada Nickel has uncovered the 11th largest nickel sulphide resource in the world, and it has a PGM upside.

Canada Nickel has its skates on and has some big plans for this year and beyond. Is Crawford an exciting take-out target for nickel majors?

We Discuss:

  1. Company Overview
  2. Putting Together Nickel Projects: Timeline and Strategy
  3. Recent Raise: Shareholder Support and Investor Interest in Nickel
  4. What Makes Canada Nickel Different to Other Nickel Companies?
  5. Drilling for Value: A Run Through the News Release
  6. Impact of COVID-19 on Canada Nickel and The Nickel Market
  7. Timeline for Deliverables

CLICK HERE to watch the full interview.

Company Website: https://canadanickel.com/

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.

Canada Nickel (TSX-V: CNC) – The night is young, And we’re just getting started (Transcript)

Canada Nickel
  • TSX-V: CNC
  • Shares Outstanding: 67M
  • Share price C$1.33 (22.05.2020)
  • Market Cap: C$87M

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

The newest nickel story on the block, with a trebled share price since we last spoke with them around the time of their IPO. Highly impressive. EV/battery metals investors, take note.

Mark Selby is a renowned mind in the nickel space; his experience at Inco and the helm of RNC has given him plenty of experience with large nickel projects: in particular, the Dumont Nickel-Cobalt project. Can he develop the Crawford Nickel-VMS Project in a faster, more capital-efficient fashion? The aim is to complete a PEA/scoping study (C$4M) by the end of 2020, with an FS (C$20-30M) following a year later. This is an accelerated monetisation event for nickel investors.

Canada Nickel just announced some encouraging drill results with an exciting PGM upside: 2.6g/t. Canada Nickel has managed to create the 11th largest nickel sulphide resource globally in just 6-months for just C$4M, and it is little surprise the market has cottoned on to this value proposition. Selby believes we are on the verge of the start of a new nickel supercycle at the start of this new decade, and he believes having one of the world’s few large nickel projects outside of Indonesia will stand Canada Nickel in good stead. The CAPEX is a whopping US$1B+, but he claims the sheer scale of Crawford will be enough to attract a major to take it out, despite it not having the “sexy high grades.”

In order to hit the upcycle, Selby wants to move fast. Canada Nickel has its skates on and it doesn’t appear anything is going to stand in its way. Canada Nickel recently completed a private placement of c. C$4.5M. The original aim was to raise C$2.5M, and now with the share price tripled, Selby feels this has shown the confidence of investors in the EV narrative, even if COVID-19 has distracted. It’s incredibly impressive that Canada Nickel’s share price is up 5X on its February IPO in a COVID-19 market scenario.

What sets Canada Nickel apart from the swathe of other nickel juniors?

A.) This is a new nickel sulfide discovery: something of a rarity right now.

B.) The potential scale of Crawford: big enough to attract a major, and Selby claims Canada Nickel has only just scratched the surface.

C.) The team’s experience demonstrated at Dumont has given investors confidence, taking something from resource to fully-permitted project.

Selby reveals that from the first two step-out holes from its latest drilling operations have more than doubled the strike length already registered. Exciting. Perhaps most importantly, the first assays from the first drill hole were the highest grade nickel intersection in the main nickel dunite area: 55m at 0.42% nickel, with 0.2g/t palladium+platinum. What will capture the excitement of investors is the prospect of filling the mill with as much high-grade ore as possible, and Selby is clear reticent of this.

The third highlight is that Canada Nickel has hit a PGM zone 100m outside of its main nickel resource, and the company has managed to hit it consistently, across several hundred metres down to 500m depth. It has been hit in 2 different spots a whopping 1.2km apart from each other. It is clear that Crawford is shaping up to be a really exciting nickel/PGM project.

What has the impact of COVID-19 been like for Canada Nickel, and what will it continue to be? In Ontario, mining was deemed an essential service, so there has been minimal disruption for the company. The assays have slowed down a little, but other than that, Canada Nickel has mitigated the impacts well and has kept employees safe.

Selby will put out another resource update in July, then another in October, in addition to a whole series of drilling/mineralogy results. these will be the key derisking events. We have no doubt Selby will continue to hit his deliverables. This could be exciting news for nickel investors.

We Discuss:

  1. Company Overview
  2. Putting Together Nickel Projects: Timeline and Strategy
  3. Recent Raise: Shareholder Support and Investor Interest in Nickel
  4. What Makes Canada Nickel Different to Other Nickel Companies?
  5. Drilling for Value: A Run Through the News Release
  6. Impact of COVID-19 on Canada Nickel and The Nickel Market
  7. Timeline for Deliverables

CLICK HERE to watch the full interview.

Hey Mark, how you doing, Sir?

Mark Selby Great. Matthew, how are you?

Matthew Gordon: Not bad. Been a while, been a while, and a few things have happened since we last spoke – good and bad.

Mark Selby: That’s right, we keep moving the ball. And there’s this virus thing that’s appeared.

Matthew Gordon: I heard, I read about that, I read about that. But look, your press release is out. There are a few things on there, which I want to talk to you about. I want to see how things are going because I was intrigued by Nickel generally in this market, and people trying to hit this cycle. There’s a real kind of interest in it. But you guys have done a financing since we last spoke as well, so I want to talk about that. But first, can we just kick off with that one-minute overview for people new to the story and we’ll pick it up from there?

Mark Selby Sure. So, what we have is a very rare thing: it’s a brand-new Nickel sulphide discovery. It’s within 6-months of drilling. We created the 11th largest Nickel sulphide resource globally. We are, because of my experience at RNC Minerals advancing Dumont and I was Head of Strategy at Inco before that, we’re able to move Nickel projects very quickly through so, and there is a scoping study by year end, a Feasibility Study by the end of 2021 because what we fundamentally believe is that Nickel goes through these super cycles which are relatively unique to Nickel, every 15 to 20-years, and we think that with the EV overlay on top of an already strong demand from stainless steel and other traditional Nickel demand sources, that we’re heading for one of these in the middle part of this decade. So, we have got one of the few large-scale Nickel projects outside of Indonesia ready for that market. We think that is going to create a lot of value for shareholders.

Matthew Gordon: It would be great if you can do that. But they are quite expensive to put together, aren’t they? Traditionally?

Mark Selby Oh yes. I mean, Nickel projects at the end are, to build these projects need a billion-dollar capital. And, again, when you look at most people in terms of how much money they need to spend on drilling, the nice thing about these larger-scale, lower-grade operations is, they don’t have the sexy high-grade attached to it. But the reality is, your chances of actually finding a resource of the scale that’s going to attract a major. You can drill these off relatively productively when you know what you’re doing. And so, we raised, we did the first 11th largest from scratch for USD$4M and this PEA is going to cost us about USD$4M to get done. We’ll continue to expand the Resource, the higher-grade part of this resource. That’s really what we’re focused on here – adding value, not necessarily tons. And so, yes, we’ll be able to deliver our Feasibility Study, we hope, for somewhere between USD$20M and USD$30M max.

Matthew Gordon: And what is the timing for all of this? You talked about doing a PEA by, by when? And when’s the Feasibility going to get done? Because if you’re going to hit the cycle, you’re going to need to get your skates on, right?

Mark Selby: Yes, yes. And we have, yes. I appreciate the Canadian analogy there. So yes, no, we’re skating, or skating as hard as we can. So, we’ll have that PEA done by the end of the year, hopefully a little earlier than the end of the year. And then we have got a whole team of people that we have worked with before, we’re getting them into place. And the whole goal with that team is, the scoping study is going to be to pull up before the end of the year. The goal is really having that Feasibility Study done by the end of December 2021. Because the reality is in terms of, you want to be one of the first projects out of the gate to attract the large-scale investors. And then two, in terms of take-outs, valuation wise, if you look at what Nickel sulphide discoveries, large ones, have gone out for it in the past, you get one or two per decade, they tend to get taken out between scoping study and Feasibility Study. So, we want to surface that value as quickly as possible for our shareholders.

Matthew Gordon: Okay. And then you raised this money recently. What type of people came in, because I know everyone’s sniffing around – EV revolution, battery revolution, whatever you want to call it. Nickel is at the forefront of a lot of people’s minds, but there’s a lot of stories out there too. Did you find it easy or difficult to raise capital?

Mark Selby Well, we chose probably one of the sort of second worst months in the history of capital markets to go to raise money, back at the beginning of April. I mean, Gold has been able to raise money, and it has been good to see the money that is being raised in Gold, but outside of Gold there’s been almost nothing raised in the base metal sector. So, I think it is a sign of confidence, A, in the Nickel story generally. And then B, in our project specifically, that we went out for USD$2.5M and we ended up with USD$4.5M, and our share prices has basically tripled since we announced that story.

I mean, we started trading at the end of February, just as COVID was breaking, but our share price is up 5x during that timeframe.

Matthew Gordon: Which is insane. So obviously people are liking what they’re hearing. So, what precisely do you think that’s resonating with them? Because again, we have spoken to companies telling Nickel stories, they’re not getting that kind of reaction.

Mark Selby I think that A, that it’s a new Nickel sulphide discovery; a lot of Nickel projects that are in the market have been around before and then recycled. This is truly a new discovery. B, I think it’s the potential scale of this asset, again, in this market, what has traded well and what gets valued well are those projects that have the scale that can attract a major. And I think our initial resource, which was the 11th largest right out of the gate, and we just scratched the surface of what we have, I think has really got people there. And I think C, I think there’s, we did it with Dumont in terms of getting from resource right through to fully permitted project. I think there’s confidence with the investors behind us that we’ll be able to do the same thing with Crawford, but because we have done it before, we’re going to be able to do it in a much, much quicker, much more capital-efficient fashion.

Matthew Gordon: Okay. Interesting. Let’s get into the news release here, because you have done a bit of drilling. You got some numbers that look good to me, but why don’t you tell us about it?

Mark Selby Yes, I mean there are three key takeaways from those drilling results: first off in terms of the Nickel resource, we drilled off one portion, which was less than 20% of the structure that we have there to deliver that 11th largest resource. These are the first new step out holes. And so, from the first two step out holes we basically confirmed that this is more than double the strike length of what we have got already. So, in terms of resource upsize, that should give you some sense of what the scale of this resource could go. Secondly, and probably the most important point is, the first assays that we did back when the first drill hole was the highest-grade Nickel intersection that we have drilled to date in that main Nickel Sulphide area. So, it was 55m at 0.42% Nickel, and with 0.2g p/t Palladium plus Platinum. And that’s about six times what our average PGM grade is for the resource.

And again, what we’re drilling for is, we’re drilling for value, not for tons. So, what’s going to make the PEA exciting and what’s going to make people get excited about this project is being able to fill that mill with as much higher grade, higher grade ore for the first years of the project. So that is where we’re really zeroing in on.

And then the third, the third takeaway is, we hit this PGM zone setting, about 100m outside our main Nickel resource, and hit it consistently. You could cross several hundred meters down to 500m depth. And we have hit it in two other places. So again, this offset mineralisation that is going to double the strike length, it has been hit in two separate places in the same spot, 1.2km apart from each other. And yes, and then the other place that we targeted to drilling was 1.5km away from our last drill hole on the main intersection. And, we hit 2.7g p/t. So, most of what we hit before was 1.5g/t. This 2.7g/t, and there was actually 3 separate intervals that total nearly 30m of 1.5g/t material. There’s very few PGM hits outside of South Africa. And again, most of what’s in the market today has been around for a while, this is a new PGM discovery on top of what is already a large Nickel discovery. So, I think that’s the thing, people are pretty keen on Palladium and there’s very few new Palladium stories. So, I think, what’s, I know we’re not going to change the name yet, but in Canada, Nickel, the Palladium part is going to be a pretty important part of by-product credit in the economics for the PEA and the Scoping Study.

Matthew Gordon: That’s fascinating. I mean, they are meaningful grades there on the PGM. But can I just come back to, and I’m sure as you drill out more, you’ll tell us more about that, can we talk about what you mean by drilling for value? And people don’t understand this, because I’m not sure I completely understand it either. The old model is drill for resource and you’re building out the size of the ore body and that’s the old way of doing things. You’re trying to do things in an accelerated way. So, you’re trying to bring the good stuff to the fore quicker. Is that, is that what you’re doing? Is that what you mean by that?

Mark Selby  Yes, that’s exactly it. I would say Australian mining companies tend to do it. They tend to build enough resource to get their mine built then they get going. Canadian resource companies have tended to just build up larger and larger resources and that at some point they’ll put some economics around them. But it’s all about making the resource as large as possible. We already, with the first set of drilling, we’re the 11th largest already. The key piece that’s really going to move, and we have enough resource for a 50-year mine life, the key piece is really finding more higher-grade, higher-value material to be able to mine in the first few years of that mine project life. So, the geophysics that we have got sort of points as to where those higher, best areas may be. And so that’s where we have been focusing our drilling, as opposed to just stepping out on a standard basis and trying to add, just maximizing tons for the sake of maximizing tons.

Matthew Gordon: Okay. So, things are going well; share price, I appreciate, it’s great. Well done. The numbers are starting to look good. You are going to try and deliver this PEA by the end of the year. I’m assuming therefore, COVID-19 has not drastically impacted your ability to move things forward. It seems to be what I’m hearing?

Mark Selby: Yes. Northern Ontario, in Ontario, mining was deemed an essential business. So, whereas a number of other businesses and their supporting businesses shut down. In Ontario, we were allowed to continue operating and we were able to, the work that we’re doing, we can still do it in a way that keeps our employees safe, so we have been able to continue drilling. Our assays have slowed down a little bit, that’s where you’ll see there’s nine holes of assays pending. But, by and large, all the suppliers and support industries have been, they’ve been able to keep working safely and we have been able to continue to move things along, which has been great.

Matthew Gordon: Okay. And what’s your view with regards to how all of this, again I’m talking about COVID-19, is going to impact the battery market? Is there going to be a slow down before it gets back up to what it was aiming to be before? Is there going to be an impact? Because we have had a couple of CEOs come on here and go, ‘Oh, it has absolutely devastated the supply chain. It’s going to impact the way people think about these things. What’s your take on it?

Mark Selby: Yes, so I think it’s really more, well, let me talk about the battery market in general and then more metal specific. I think we are going to go through several months of economic slowdown. But I think you’re going to see governments want to stimulate the economy. So, the Chinese have always done it through infrastructure projects. And if you look at the stats that are coming over the last six weeks, they are, you’ve got copper mills running at more than a hundred percent of capacity right now. Iron ore prices; huge amounts of iron are now going into China. And the Nickel market itself, you’ve seen a lot of the physical numbers improve pretty dramatically. So, I think that’s going there.

 I think in the West where consumer spending is the biggest driver, governments are going to have to provide incentives or mail checks to people to help get consumer spending to the point where the economy is going to be growing again. And again, cars are a big ticket item; that is something where you’re going to see government incentives show up. And again, there’s a lot of discussion on non-politicians around sort of using this opportunity to retool or redesign the economy. So, I think a lot of those incentives are going to be geared towards, okay, we’re going to give you money to buy a car, help you buy a car, but it’s going to be only if you buy a clean car. So, for those people who are kind of on the fence about buying one, okay, what if I get a thousand bucks from the government to do it, then I’m going to do it.

So, I’m not as doom and gloom in terms of, I think it is going to be pretty challenging for the next year or two economically. But I think the way out of this is to stimulate the economy. And so, I think those incentives will come. In terms of the individual metals, the metal I feel sorry for the most, I think is Cobalt through this process because  it’s got three whammies: if you look at Cobalt sources of demand, one is alloys for the oil and gas industry, which has just kind of took it in the teeth. The other part is for super alloys in the aerospace sector. And so, again, airplane travel is something that’s going to take a while to fully, fully come back. And then you’ve got the EV market, which has become the third source, which is going to be, again, a few bumps here going forward. So, I think Cobalt has got it the toughest.

Lithium. Again, you’ve just got so much supply sloshing around that as we go through this low point, I don’t think, I might be wrong, but I don’t know how much Lithium production has been impacted by COVID. Where we benefit from Nickel is that one of the major mining sources is mines in the Philippines and those are going to have to ramp up to help make up for the ore that’s not coming from Indonesia anymore. But those mines have been shut for quite a period of time and it’s just been extended again. So, we’re seeing ore stockpiles coming down in China pretty dramatically. I think that’s important for investors, to think about the COVID impact, not just on demand, but on the supply of the metal. And Nickel has come out of this in pretty good shape relative to the other metals.

Matthew Gordon: That’s fascinating. That’s funny. I always love listening to you to see your take and because you understand that, that with the ghost of the micro. So I appreciate that. Well it must be exciting times for you guys. I guess you’ve just got a whole bunch of deliverables to be able to get that PA done. You feeling confident about the end of the year? That’s, that’s definitely going to happen.

Mark Selby: Yeah, I mean, between now and then we’ll have, we’ll have

Another resource update on ode in July, right. Have another resource update in October. So, before we finalize the, the scoping study we’ll have a whole series of drilling and mineralogy results again for these deposits. The key issue is, okay, how much of the Nickel can you actually recover? And again, what we’re seeing so far is very encouraging. But, we’ll have those numbers come out. And again, those are going to be the key risking events in terms of, how do we have done well getting from $0.25 to $1.25 and how do we take this, to USD$5 a share or higher from here. It’s going to be some of that news that comes out, over the summer. And then, the other big thrust of this too is, it’s easy carrying around high-grade core that looks very sexy.

You know, I did that in a prior life with target, rocks with chunks of gold in it. And, that definitely gets investor attention. But I think, in terms of delivering, building a project that the majors are going to be interested in, know large lower grade projects. I, part of the reason I’m so keen to get the economics done is to really demonstrate to people, it’s like, yes, it’s low grade, but you’re going to build an operation that’s even,, equally low cost and you can deliver very good margins., I’ll point people to believe in ATEC mine in Finland, it’s started in Scandinavia, it’s a 0.22% copper where the tiny bit of Silver and Gold is a by-product credit and it is in the first core tile cash costs for copper,, so it has a fraction of the grade, but because it’s in the right location, lots of infrastructure, it has a productive workforce and it’s built to the scale to the,, it’s the right scale for that kind of grade., they can make money all day long. And so, that’s what we want to demonstrate with, with Crawford, know that we’re going to be able to build that kind of scale operation and generate those kinds of cash flows for many, many, many decades to come.

Matthew Gordon: Okay. Well, I appreciate your time today. I’m just, delighted for you, got the ball rolling and got the money in as well. But, you clearly know what you want to do and how you want to do it, which is fantastic. Now you’ve got to go and do it. So, yeah. Over to you. Stay in touch.

Company Website: https://canadanickel.com/

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.

Blackstone Minerals (ASX: BSX) – If we both pull together, tomorrow’s sure to come (Transcript)

The Blackstone Minerals company logo
Blackstone Minerals Ltd
  • ASX: BSX
  • Shares Outstanding: 192M
  • Share price A$0.14 (17.04.2020)
  • Market Cap: A$27M

Interview with Scott Williamson, Managing Director of Blackstone Minerals (ASX:BSX).

Blackstone Minerals: a nickel-cobalt-gold (battery/precious metals) company looking to get into production within the next 3 years. Ambitious.

Blackstone Minerals is an ASX-listed junior, exploring the Ta Khoa Nickel Project in Vietnam, the BC Cobalt Project and gold and nickel projects in Western Australia. The primary focus is on Ta Khoa, which previously operated between 2013 and 2016. Williamson claims the previous owners sunk over A$130M into the project; this creates an obvious disparity with Blackstone Minerals’ market cap, A$27M, which had been steadily falling away but has made a comeback in the last few weeks. The share price stands at A$0.14 today. Blackstone Minerals is looking to bring the project back into production and take advantage of the inbound EV revolution, by feeding the nickel concentrate into nickel sulfate for the Li-ion battery industry.

What’s the big news recently? A deal between EcoPro, the largest cathode manufacturer in Korea and second-largest globally, and Blackstone Mineral was announced. The binding share purchase agreement outlines a commitment for A$6.8 million at a 62% premium to Blackstone Minerals’ 30 day VWAP. EcoPro will end up with 17% of Blackstone Minerals shares. Looks like a smart piece of negotiation.

Williamson thinks the market will take a while to process the significance of this transaction and is perhaps a little unaware of how large a player EcoPro is. Williamson sees EcoPro as the “perfect partner,” and hopes it will reveal its value over time.

Blackstone Minerals is on track for its maiden resource in June/July. This will be followed by a PEA in August/September. Williamson sees this as a catalyst moment where the market will realise just how much nickel has been left behind, and how economic the first ore body will be. The money will also be used to explore other ore bodies, but the main focus is to move all the studies through to a bankable Feasibility Study. Blackstone Minerals is fully funded to this point. The cost structure at the Ta Khoa Nickel Project is impressive; to put this into context, drilling costs A$60 per metre, as opposed to A$300 in Australia and A$500 in Canada. The nickel orebody itself is twice the grade that Blackstone Minerals was expecting at 1% nickel. Williamson describes this nickel as a “significant tonnage…” that will “deliver a 20-year mine.”

Williamson is currently conducting metallurgical test work in order to assess the potential monetisation of the byproducts (platinum, palladium, gold, rhodium, copper, cobalt) at Ta Khoa, but he is confident all the metals will be economic and add an extra 20% revenue on top of the nickel.

What is the CAPEX looking like at Ta Khoa? c. US$100M for a downstream processing facility, plus additional capital to upgrade the concentrator. Williamson is confident Blackstone Minerals will “land below” A$200M total. Williamson claims this is very competitive. He also insists that EcoPro will not accept anything less than achieving production within 3 years. Will this additional pressure help or hinder Blackstone Minerals?

We Discussed:

  1. Company Overview
  2. News Announcement: Negotiations and Terms. What did EcoPro Buy into?
  3. Market’s Reaction: What has the Share Price Done and What’s Stopping Investors
  4. Vietnamese Assets: Why Did They Shut Down and What are the Plans Going Forward? Monetising the Bi-Products
  5. Low CapEx Compared to Peers: Getting into Production
  6. 2020 & What Investors are to Look Forward to
  7. Financed ’til Production (?)
  8. BFS Timings: Who’s Financing the Studies?

CLICK HERE to watch the full interview.

Matthew Gordon: Hello Scott. How are you, sir?

Scott: Williamson: Good thanks, Matt.

Matthew Gordon: Where are you in the world at the moment?

Scott: Williamson: Yes. So in the self-isolation mode in Perth with my family and yes, trying to stay away from the streets and stay safe.

Matthew Gordon: Yes, we spoke to couple of guys in Perth yesterday and they said they have glorious weather so it’s not too bad a place to be holed up, right?

Scott: Williamson: Yes, it’s great.

Matthew Gordon: Why don’t we kick off with the one-minute overview and then we will get into some of the more recent news.

Scott: Williamson: Yes. So yes, we’re Blackstone minerals. We have a portfolio of battery and precious metals assets across the globe. A flagship asset is the Ta Khoa Nickel project in Northern Vietnam. That’s a previously operating mine, so it had operated between 2013 and 2016. And the previous owners sunk over USD$130M into the capital infrastructure. So our focus is to bring this mine back into production. A little bit of a different strategy to the previous owners of that asset. And we’re looking to, I suppose feed this Nickel into the Lithium ion battery industry. And we’re looking at to, I suppose, work with strategic partners to develop the industry processing which will move this Nickel concentrate into a premium product, which is Nickel sulphide for the Lithium ion battery industry. So yes, looking forward to the next stage of that process.

Matthew Gordon: Fantastic. Fantastic. Let’s see. We talked back in November when you were in London for a conference there, and we sort of went through the history and so forth and people can refer back to that interview, because you had a few other assets around the world; obviously the cobalt which obviously, market conditions meant that it makes sense to park that up and focus on your Nickel assets. So let’s do that today. You have just announced some rather good news, haven’t you?

Scott: Williamson: Yes. So we’re placing a strategic shareholder in EcoPro. EcoPro is the largest cathode manufacturer in Korea and the second largest in the world. EcoPro’s main customers are Samsung SDI and another group called SK Innovations. So these are two of the biggest battery manufacturing companies in the world. And so they really are very well-positioned now, with a USD$6.8M investment at a 62% premium to market. And I think that premium just shows that these, I suppose, larger battery players, are focussed on a longer term future, and this EV revolution isn’t slowing. And if anything it could actually be heating up a more so as the economy moves back into sort of stimulus mode.

Matthew Gordon: Okay. So, obviously, USD$6.8M is a nice my sum of money to get and I want to talk about what you’re going to do with that in a second, but a premium like that; what was that conversation like? What are they buying into? What have you said? Because I think a lot of people want to know how you go about negotiating. So tell us about it.

Scott: Williamson: Yes, so I suppose the premium is there because we believe that’s a suitable premium to bring in a strategic partnership. So the partnership is, I suppose, around them potentially over time getting access to the Nickel. So at this stage it’s a fairly early investment for them. It’s a small investment. They do end up with a 17% shareholding in Blackstone, but we believe that the premium is fair and reasonable because it’s a strategic position that allows them over time, they will have access to the metal that they need for the Lithium ion battery industry.

Matthew Gordon: Can we talk about the terms around that one? Because that’s what I was really getting in it to because what have you had to give away to get a premium like that? Because for them it’s not a lot of money, okay? It really, really isn’t a lot of money. For you, it’s meaningful and it’s a step change potentially in terms of what you can do to release the potential in Vietnam, right? So what have you had to give away?

Scott: Williamson: So, they will have a board position; so the EcoPro will have a position on the Blackstone board. So that’s one thing we’ve had to give away. The other condition prescient is that we have to exercise the option to own the Ta Khoa Nickel project, so we will exercise that option which is USD$1M worth of Blackstone shares we will need to give to the vendor. The other thing I suppose is that there’s a ‘best endeavours’ sort of a relationship here where we now move to this next stage, which is the joint venture on the downstream processing facility. So it’s not a formal sort of, I suppose, partnership at this time, but the next stage would be to now move towards this partnership where we partner on the downstream processing facility and we both then move to that next stage over the coming 6 to 12-months.

Matthew Gordon: But that’s all upside for you, right? I mean obviously you’re able to pay the previous, or the current owner of the asset. Giving a board seat away – so what? But then are you saying, well, we could potentially do something further downstream? That’s great for you; you’ve got a big partner with big pockets who are strategic as well rather than just being ‘dumb money’, as I think they usually call it, and that’s great for you. But why have they paid you so much? Do they feel that they’ve taken up some kind of option there? Was there some kind of race going on?

Scott: Williamson: Yes, well that’s a good point. So what they do realise is that they’re not the only ones that were talking to. So we’re talking to other Korean buyers; major battery manufacturers, so they have realised that they’re not the only one in the room here. And we’re also talking to other, I suppose, mining companies as well. So we made it fairly clear to them that we are open to talking to all parties, and so they’ve jumped first, which is great because they’re entrepreneurial and they saw the opportunity, but they also realised that they couldn’t put any real, I suppose, difficult terms around this deal because we would have potentially moved onto the next party that we’re talking to. So they understand that they’re not the only ones. And they need to tread carefully because we’ve got the metal and the Nickel that the suppliers need to produce these batteries. So they have played it very smartly, and so they now have the jump on the rest of the pack but they are by no means the only one that we’re going to deal with over time.

Matthew Gordon: Okay, that’s interesting. So you’re saying that there’s no kind of right of first refusal in there? There’s no options on this, whatever this downstream deal looks like. They are not secure in that sense. All they’ve done is paid you a premium so that you think that they’re a fair partner. But in a commercial world you’ve still got choices because there’s nothing in your, what you’re telling me is, there’s nothing in paper which ties you down to EcoPro moving forward other than they have got 17% of the company? That’s quite good. That’s quite good for your shareholders.

Scott: Williamson:  They are very happy. So that, and I think the reason we were able to get a deal like this is because of the fact that there’s not many assets like this left around the globe. And particularly because our capex potential is much lower than our peers, and we talked about this last time. So they see this as an opportunity whereby they have to, yes, they do have to tread carefully because we do have options here and we have an asset that will deliver before a lot of our peers. So it’s got that ability to produce that Nickel that’s required in the next two to three years. A lot of our peers will struggle to deliver in that time line because of the capex hurdles, and obviously even more so now with the difficulties in the capital market.

Matthew Gordon: Yes. Okay, well, we’ll talk about the asset in a second if you don’t mind. Okay. So what’s the reaction been like in the market to this announcement and what’s the share price done?

Scott: Williamson: Yes, so we went up, we’re not trading anywhere near the issue price of the shares to EcoPro, so we, I think we’ve got intra-day about USD$0.06c. The shares will be placed at USD$0.17 cents. So I think it’s a fair reaction. I think the market will take some time to digest this. And I’m not sure that the market understands who EcoPro is, and over time, it’s not a big name like Samsung or LG, but over time people will do the research and realise that this is one of the major prize in the cathode industry globally. So this is the perfect partner for Blackstone. So yes, I think we’re in a market where you’re going to get profit-taking and unfortunately we saw a bit of that today, but we’ll say what tomorrow brings.

Matthew Gordon: Okay, well I guess it’s down to you to tell the story, right? Because I was the same: I was like, who is EcoPro? I just didn’t know, but I think once you know, you get some sort of comfort that they will probably, if you deliver, want to follow their money, as you say to secure some kind of offtake agreement or other agreements.

Okay, let’s talk about those assets then. You’ve talked, you told us that it has already got USD$130M sunk into from previous mining operations, can you just remind why it’s shut down and what you’re going to be doing going forward?

Scott: Williamson: So, it shut down at the bottom of the Nickel price. So USD$8,000 p/ton Nickel price when the mine was put into care & maintenance. The reason it was put into care & maintenance was also the fact that they actually mined the first ore body and depleted it and they didn’t do any exploration outside of that first ore body. So there was no exploration conducted by the previous owners. They left behind 25 exploration targets, which we’re now moving through and we’ve just drilled out the first of those 25 targets. The first target is called the Ban Phuc deseminated ore body. We believe that will be mined for the next 10 to 20 years. And so that’s the other reason why we’re able to, I suppose, entice or attract these end-users is we’ve got a mine that justifies a significant investment from the end-user because we can deliver the Nickel over the long-term. So, a lot of our peers who have smaller mine lives and won’t be able to justify building that downstream processing facility, which we’ll now look at.

Matthew Gordon: Okay. So what I want to talk about is, obviously, what you’re going to be able to do with, well, whatever amount of that USD$6.8M is going to go in the ground because you have got quite good grades. I mean, over 1% on average, across the board looking at some of the drill results. So that’s pretty good. What you don’t have currently is a sense of this scale of this; how big this could be. So what are you going to do with whatever money that you’re going to spend from the USD$6.8M?

Scott: Williamson: Yes, so we’re still on track for our main resource in June, July this year, and then we’ll follow that very quickly with a scoping study, or a PEA, as they call it in Canada. And that will be the moment where the market realises how much Nickel has been left behind, and how much, or how economic that first ore body could be. So they’re two key milestones. The USD$6.8M will also be used for exploring other ole bodies, but at the same time, we’ll also move these studies all the way through to a bankable Feasibility Study. So with USD$6.8M, we’re actually funded all the way through to complete a bankable study.

Our cost profile, or cost structure in Vietnam means we can get a lot more done. We’re drilling at USD$60 p/m versus in Australia that would be USD$300 p/m or yes, in Canada that was USD$500 p/m. So we can do a lot more with the USD$6.8M in Vietnam than people with the similar amount would need to invest in Australia.

And we we’re confident we can get all the way through to a bankable study, and  that’s the idea of this capital injection from EcoPro is them saying, how much do you need to finish a bankable study? Here it is. Bang.

Matthew Gordon: So, you probably won’t answer this, but the results will come out in May, June, July sometime, right? That the scoping study. What do you know today? Are you encouraged by what you see in terms of where this ore body sits in terms of what do you know about it? What can you tell us?

Scott: Williamson: Well, what we can say is that yes, I think we’ll go back to your first question, the 1%, Nickel: we’ve got a significant amount of this 1% Nickel, which is incorporated into our discovery zone. That is twice the grade that we were expecting, so we are happy with anything around 0.5% Nickel. As you know, there’s some of our peers that are looking to mine even less than that or lower grades. So we’ve got a significant tonnage. These higher grades will deliver a 10 or 20 year mine. So it’ll be an economic mine also because we’ve got the Platinum, Palladium, Gold, Rhodium, Copper and Cobalt. By-products will deliver up to 20% extra revenue on top of the Nickel. So there’s 80% of the revenue that comes from Nickel, we’ve also got all these other metals in it.

Matthew Gordon: How do you know you’re going to be able to economically create by-products with all of those different commodities?

Scott: Williamson: Yes. So we are doing that metallurgical test work now, the previous owners didn’t assay for PGE, so this is a new part of the mine that wasn’t previously understood. So we’re doing that initial work now and we are confident that those metals will all float into the concentrate, and so you will be able to monetise that.

Matthew Gordon: Where does that confidence come from, Scott? Because obviously many, many companies think that until the metallurgic work is done. So what do you know?

Scott: Williamson: Yes, we’re done early bench scale test work, yes. So we need to do the numbers around that. At the moment we don’t know who the customer might be for Palladium or Rhodium. There is a bit of work to do but we do know that we can recover them.

Matthew Gordon: Right. Okay. So back to the scale question: what do you know  today about how far this goes out? I mean how much historical drilling data have you got, for instance?

Scott: Williamson: So we’ve got, I suppose the things we can talk about, we’ve got a 1km ore body. It’s 500 meters wide. There’s multiple millions of tons, so multiple tens of millions of tons of economic Nickel sulphide in the first ore body. So if we were to build a 2 million ton per annum concentrator, we might be looking at a 10 to 20 year mine life. So yes, those are the sort of numbers we’re looking at.

Matthew Gordon: Okay, and I know you haven’t done the scope of study, your PEA at the moment, but you talked about being funded through to BFS. What type of capex numbers would we be talking about? Because again, you’ve references low capex compared to peers who may be talking about USD$1BN to kind of get sulphide projects a little bit cheaper. So what do you know?

Scott: Williamson: Yes, so what we can say is that the numbers are still looking very competitive: circa USD$$100M for a downstream processing facility. We would still need to upgrade the concentrator so there’s another capital spend there, which we’re still doing the work on, but I’m confident we’ll land below say, USD$200M total. So yes, we’re still 20% off a HPAL scenario. So yes, we’re aiming for that 10% to 20% compared to that billion dollar HPAL plant, which is our main competitor.

Matthew Gordon: Right. Okay. Yes, I mean it’s very, very different. I think we’ve done enough interviews with people talking about the difference in laterites and sulphide ore bodies. So, USD$200M market cap again, where would you, I mean, because you’re going to tell me you are getting into production in the next two, three years. Right? That’s pretty quick. In the scheme of things.

Scott Williamson: Fortunately, I’ve now signed up EcoPro, and they are not going to accept anything less, and they’re going to keep me accountable to that. And that’s fine because with my background being mining engineer, I’m happy to go forward with this. And the good thing is now we’ve got the funding partner, so that won’t be a bottleneck. So going forward, finding one big bottle neck, we obviously need to push very quickly through these studies and then obviously we don’t want to be cutting corners on any of that drilling and metallurgy, and so there’s a lot of study work. There’s still 12 to 18-months of studies here and then we can build in 2022, and mining in 2023. So EcoPro will probably will make me accountable to that, and I’m happy because as long as they keep funding it, I can deliver that.

Matthew Gordon: Well, fantastic. If they keep funding it, great – happy days, you can focus on running the business, not running around the world, chasing money. Right? Not that we can at the moment, but yes, you know what I mean. So if I look at this project, I need to understand it from an investment perspective, okay? That’s what people watching here are trying to work out. It’s like what am I buying into? So you’re saying it’s a quick to production, low capex, high-grade Nickel project. Obviously you’ve seen a bump in the shares today, it hasn’t really done much prior to that because you’ve been working out what you’re trying to be and what you’re trying to focus on, what you are trying to do. What can shareholders look forward to this year, or even next year in terms of proper catalyst moments?  Because I think that drill results come and go and no one cares. Right? But what are you going to be able to tell people which is going to significantly move this company along? What are those big moments?

Scott Williamson: Yes, I think the first one would be that main resource; so we can really wrap some numbers around the resource: tons and grades. And you will see the grade of these by-products as well. So that’ll be June/July. And then the scoping study is probably the biggest milestone because that’s when we start to put NPVs around this. So I’ve already told you about capex, but where we’re obviously aiming for NPVs that are multiples of our capex number. And so there will be a moment here where we are reminded here, when people realise that the market cap, whether it is 20 or 30, we are talking multiples of USD$100Ms of NPV here. So that’s the moment where the market goes, okay, so there’s an NPV of that, they’ve got the funding partner. There’s already been a mine built there before, so there will be a mine there again. It has to sink in eventually. So yes, the key milestones will be the scoping study, the mined resource – that’s when the institutional investors have to come in and say, well hang on, this is going to be a mine again. So, yes, I think it’s when we wrap the numbers around it. And obviously it’s very difficult to do that until we do the formal draw process and all  of that. That will come.

Matthew Gordon: No. Okay. You covered a lot of the right parts there, I mean, I guess the big one that people are looking at is obviously the fact that you’ve got a partner. Are you going to be brave enough to say you’re fully funded through to production?

Scott Williamson: The conversations we’re having are that they still want us to bring our own capital. And the reason why is that they don’t want to be left holding the baby. And there’s a great story; it’s the Ambatovy mine in Madagascar, Korea blew themselves up putting themselves up. Korea learned the hard way. I don’t want to be left holding the baby here. And so they do want us to bring our own capital to the table. But you could almost say that it is fully-funded because within Korea I think we can bring all that capital to the table. And so we’ll start working with other players as well here. So yes, we’ve closed, but we’ll still need conventional capital markets at some stage.

Matthew Gordon: Okay. Which you expect to get from Korea or elsewhere in the world?

Scott Williamson: Well, there are pockets of money out there and they are harder to find, those that can invest in this type of opportunity. And so we’re hunting those down at the moment. There’s a chance that we could fund this almost entirely through Korean money but that’s not a good strategy either, we need to expand and look at all the options.

Matthew Gordon: Yes. I think you referred earlier to your optionality around the funding is important to you in terms of negotiation or else you’ll find your money all of a sudden it gets quite expensive if you’re reliant on one partner. So I think that makes a lot of sense to me. Okay. So lots and lots of good stuff there, Scott, appreciate you coming on and telling us all about it. Obviously you have moved things on significantly from even from November to today; it’s only four short months, we actually, it will feel like very long weeks at the moment with this confinement. But you know what I mean. I look forward to hearing about the scoping study and any of these other results as they come through. But you’ve identified quite a good asset there. I hope you hope you can get all the way through to this BFS quickly. What’s your timing on that actually, the BFS?

Scott Williamson: 12 to 18-months from now, I think we can deliver that. So the scoping study – as soon as we can, so sort of August, September. PFS soon after. The conversion from scoping to PFS will be fairly quick because most of our, we are hoping that most of our resource will be in that indicated category so we can convert to PFS quickly. There is a lot of work to get into that bankable stage, which is part of the plants and yes. And so that’s a 12 to 18-month process.

Matthew Gordon: Actually, you raised an interesting point, before we go is,  would EcoPro fund any pilot or demonstration plants, or is that going to be part of the larger funding?

Scott Williamson: Yes. So by that stage, we probably would’ve, I suppose, built our partnership to a formal like a SPV type scenario where we would actually fund that together.

Matthew Gordon: Okay. Enough said, Scott. I appreciate your time. I know it’s getting late there, time for a beer I suspect, so I’ll let you go and do that. Stay in touch and give us a call.

Scott Williamson: No worries.

Company Website: http://blackstoneminerals.com.au/

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.

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FPX Nickel Corp (TSX-V: FPX) – One Of The Largest Nickel Mines In Canada?

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FPX Nickel Corp
  • TSX-V: FPX
  • Shares Outstanding: 163M
  • Share price C$0.15 (14.04.2020)
  • Market Cap: C$25M

Crux Investor recently interviewed Martin Turenne. He is the President & CEO of nickel explorer, FPX Nickel Corp. (TSX-V:FPX).

For investors with foresight and patience, the EV revolution is something that is hard to ignore. Nickel will be at the heart of any such revolution, and Turenne hopes to capitalise on this and make shareholders money.

FPX Nickel’s exclusive focus is on developing the large-scale Decar Nickel District in central British Columbia. The district hosts the Baptiste deposit, which is currently at a PEA stage. FPX Nickel claims it has the potential to become ‘one of the largest nickel mines in Canada.’ This is exciting news, especially coming from a junior.

We’ve got plenty of detailed nickel-related articles on our platform, in addition to numerous nickel interviews. Nickel investors should check them out!

We discuss:

  1. Company Overview
  2. The Team at FPX Nickel
  3. Positioning in the Market
  4. The Project
  5. Cash Position
  6. Updating the PEA
  7. Investors and Their Concerns

Company Website: https://fpxnickel.com/

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.

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Blackstone Minerals (ASX: BSX) – A Major Strategic Partner The Market Hasn’t Noticed?

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Blackstone Minerals
  • ASX: BSX
  • Shares Outstanding: 192M
  • Share price A$0.14 (08.04.2020)
  • Market Cap: A$27M

Last week, Crux Investor interviewed Scott Williamson; he’s the Managing Director of Blackstone Minerals (ASX: BSX). Blackstone Minerals is a nickel-cobalt-gold (battery/precious metals) company looking to get into production within the next 3 years. That’s certainly an ambitious stance!

There are numerous articles and interviews on the Crux Investor platform relating to nickel, or the EV revolution. Why not check some of them out? You won’t regret it.

Blackstone Minerals offers a low-cost, high-grade, bulk-tonnage nickel project in Vietnam, and now it has brought a major backer to the table. But why hasn’t the share price moved? Williamson is targeting nickel + co-product (platinum, palladium, gold, rhodium, copper, cobalt) production within the next 3 years, and claims the company’s new major partner will hold them to this commitment.

We discuss:

  1. Company Overview
  2. News Announcement: Negotiations and Terms
  3. Market’s Reaction: What has the Share Price Done?
  4. Vietnamese Assets
  5. Monetising the Bi-Products
  6. Low CapEx Compared to Peers: Getting into Production
  7. Plans For 2020 And Beyond
  8. BFS Timings: Who’s Financing the Studies?

Company Website: http://blackstoneminerals.com.au/

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.

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Ardea Resources (ASX: ARL) – A Large Nickel Sulphide Play

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Ardea Resources Ltd
  • ASX: ARL
  • Shares Outstanding: 117M
  • Share price A$0.20 (19.03.2020)
  • Market Cap: A$23.5M

We recently interviewed Andrew Penkethman, CEO of Nickel Sulphide project developer, Ardea Resources (ASX: ARL)

Nickel is a space that has a great deal of potential. Nickel is a key battery metal behind the EV revolution that futuristic investors just can’t stop talking about.

Ardea Resources’ Kalgoorlie Nickel Project looks large and impressive. How does Penkethman plan to monetise this?

We’ve got plenty of detailed nickel-related articles on our platform, in addition to numerous nickel interviews. Nickel investors should check them out!

We discuss:

  1. The Promising Kalgoorlie Nickel Project
  2. The Future Of Nickel, In Light Of The EV Revolution
  3. The Ardea Resources Business Model

Company Website: https://ardearesources.com.au/

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.

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Canada Nickel – 11th Largest Nickel Sulphide Resource Globally! (Transcript)

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Canada Nickel
  • 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).

Selby tells us he already has the 11th largest nickel sulphide deposit from less than 20% of the structure that they are exploring. 260Mt with a higher-grade core running through the middle. And he claims they have an accelerated timeframe planned to get into production.

A PEA will be out in the next 3-4 months and then a Feasibility Study by the end of 2021. Canada Nickel Corp has hopes to time this nickel cycle right and therefore be able to fund the project into production off the back of the Feasibility Study.

Key take-outs are 1. This is a large project – elephant hunting territory – which is attractive to large Nickel Majors 2. The Nickel Resource has been added for only $1 per ton. Many projects cost spend $1,000 per ton to add to their Resource. 3. The PEA will be out in 3-4 months. Investor can understand the economics at this point. 4. The grade is relatively good and the company hopes to be able to mine a higher-grade core first to deliver a higher return in the earlier years. 5. It’s a Nickel Sulphide project which is preferred because of the significantly lower CAPEX compared to Hpal projects required for Nickel laterite.

CLICK HERE to watch the full interview.

We Discuss:

1:16 – Going Public: The Aftermath

1:46 – PDAC Conference: Low Attendance Rates

3:16 – Resource Numbers: What Do They Mean for Investors?

7:37 – Commercialisation: Possibilities and Timings

10:45 – Focusing on High Grade: How Will it Work?

12:22 – Coronavirus’ Impact on Market and Possible Outcomes

Matthew Gordon: Hi, Mark, how are you Sir?

Mark Selby: Good to see you again, Matthew.

Matthew Gordon: And we spoke last week; you went public. How did that go?

Mark Selby: It’s good. The transfer agent mechanics in the background took a little while to get people’s shares into account, but the nice thing is, we did trade a bit and the stock was up 250% on the first trading day, so that’s a great way to start. We’ll see what happens and we’ll see what happens today.

Matthew Gordon: Beautiful, beautiful, beautiful. Now you’re at PDAC; about to go through three days of marketing, shaking hands, meeting people, et cetera, et cetera. Tell me, what’s it like there? Because, I’ve heard various reports about attendance levels. What’s your sense of what’s going on there?

Mark Selby: Yes, I know what’s interesting, and again, there’s a lot less shaking hands and a lot more touching elbows!

Matthew Gordon: True, true, true!

Mark Selby: No, no, there really has been an impact. I know one of the guys who came in from out of town, you stay in a hotel in Toronto, he didn’t, he just asked them, he’s a consultant who wanted to just, just was curious. And so, yes, I think they basically had about a third of the people not show up, basically cancel the reservations from a few weeks ago. And I co-chair one of the larger introductory sessions at the conference. It’s held in the big room and I would say, yes, there’s probably 20-25% less people now than there have been in past years for that session. So yes, I noticed it. There’s definitely, definitely been an impact.

Matthew Gordon: So clearly coronavirus; people nervous about traveling at the moment. I think there’s a lot of news going around. Okay. So that’s having an impact.

Mark Selby: One of the speakers on the panel, she works for one of the big banks and yes, they were basically – she did it remotely because they have an only essential travel policy going right now.

Matthew Gordon: Right. Okay. Well I’m sure it’s going to impact some people’s ability to do business or a certain account chart with, whether it be strategic partners, funders, whatever. But I guess we’ll hear more of that as the week carries on. But let’s get down to business here: so we spoke to you last week, you went public – well done, 250% increase, but let’s see how that goes this week. You also released some numbers around your resource, so tell us about that.

Mark Selby: Yes, we were very happy. Again, we’ve been drilling since September. And so the resource results were the 12th largest Nickel Sulphide resource globally. The nice thing for that in terms of technically what’s there is, we’ve talked about this higher-grade core showing up in the drilling. And the nice thing is from a resource perspective, there’s a higher-grade core running right through the middle of it. So, again, Dumont is the closest comparison, and so this higher green core, we’ve got 260Mt out of 900Mt; that’s basically about 15% better than Dumont. And then we’ve got some additional grade shells. And we’ve got about 100M tons at 0.3, 0.4, so again, the key thing with that higher-grade core is that when you go to get this into production eventually, if you’re able to mine that material first, that means just a lot more cash flow right out of the gate, and that just helps the economics and helps you run the business.

Matthew Gordon: Well. Yes, for sure. So, yes, I guess you’re going to have to work out, are you going to be able to mine that first? And you’ll presumably be working on that over the next few weeks and months. And also some pretty big numbers out, right? So what does that actually mean? I mean, how should investors interpret that? I hear the numbers, but so what? What does it mean for me?

Mark Selby: Yes, no, the key thing again, because a lot of mining companies just add ounces or pounds for the sake of adding ounces or pounds. , the key thing here and that what I said the other day is that in the market today particularly is you see, companies that have elephant scale projects that can attract major mining companies or attract downstream partners to come into it. So a lot of companies in Columbia and Ecuador right now, with Copper and Copper Gold discoveries, being a Nickel Sulphide project of this scale, I believe right now in the market we’re in for EVs, and the majors wanting to get exposure to battery metals, that kind of a scale deposit should get BHP’s attention, should get Teck’s attention if they want to get meaningful exposure to battery metals: Nickel and Cobalt that we have.

Matthew Gordon: What do you mean? You talked about elephant hunting before, but where are you in the scale of things? Give me a sense of it. Is this like number one in the world or in the top 100?

Mark Selby: Yes, right now, we are basically around the 11th largest and we’ve only explored, that’s off less than 20% of the structure that we have at Crawford. So we think we’ve got potential to make it larger. And again, where we’re going to focus is on those areas where we’ve seen the higher grade. And so we’re going to take what we learned about where the high grade is at the one place we drove off and see if we can find some more of it. We’ve got some ideas in terms of where that may be sitting in the rest of the structure. And so, because again, the thing that I’m also quite proud of is our team added that resource for about a dollar a ton. You literally, because the scale of most Nickel Sulphide deposits is quite small, yes, they’re high grade, but you don’t find many tons for a lot of drilling and for a lot of companies, they are spending literally almost USD$1,000 per ton to add resource and reserve.

Matthew Gordon: Is that an extreme example or what was sort of average?

Mark Selby: No, no. I would say like I think in Western Australia you’re looking at $100 per tonne of exploration costs to define Resources. It’s okay because they’re trying to find little small Nickel lenses, that might be today quite deep. So you’re drilling again, you might be drilling 500m holes, 800m holes, hoping to hit 10m of massive Sulphide Nickel, where we get to drill a 500m hole, 450m of it have assets that end up in a Resource model.

Matthew Gordon: Right. Okay. So that’s going to give you, again, as investors, we’re all going to be interested in, at what point do you start being able to, and I know it’s early days, but at what point do you start being able to put some numbers or thoughts around the economics of this. So I’m hearing it’s large, you’re finding in terms of they contain Nickel Sulphide, 11th largest in the world. I mean that’s pretty good, straight out of the gate. It’s cheap. But at what point does that start converting into meaningful numbers for us as shareholders?

Mark Selby: Yes, so that’s the key. I mean, what we wanted was, again, we wanted to work this on an accelerated timeframe, given our understanding of this type of deposit. And so this Resource and the results we have are of the scale and are of the potential that we’re going to move that Resource right into PEA stage. I’m literally meeting today with one of the leading engineering firms to start scoping out to kick off that work. And we’d look to kick that off in April and have a PEA done for the fall for this coming year, which again, we’d roll right into a Feasibility Study from there. So again, from 6-months from drilling, we’re going to be able to start putting numbers around this which is very fast.

Matthew Gordon: Okay. And then how quickly, you mentioned the Feasibility Study as well, clearly, but what’s your timeframe on that? Because the more you do, the more notice people take. And when you say accelerated timeframe, I’m interested in, do you mean it? Or is this the usual long drawn out process and you guys are…

Mark Selby: …are we’re talking 6-years from now, hopefully not the project because it’s construction. Yes, no, we’re looking to have the Feasibility Study target would be the end of 2021. And so, and then a 2-year build from there. So that’s the timeframe we’re going to be working towards.

Matthew Gordon: Well, you’re suggesting there that you could get financed off the back of a Feasibility Study?

Mark Selby: Yes. Again, in a kind of market we’re in now, in the market we’re expecting for battery metals, when you’ve the head of BHP saying, ‘We need more future facing metals, we need more Nickel and more Cobalt’, I think when we get to that point we should be seeing the interest from the major mining companies and from the industry downstream players.

Matthew Gordon: Okay. That’s pretty big statement you’re saying. And in 2021, you could have a Feasibility Study ready. You will have been having, and would hope to conclude financing discussions around that point – is that what you’re telling me? Okay. And then there’s a 2-year build out, so when you say accelerated, you do mean accelerated, and you’re hoping to hit the cycle. There’s a lot of ifs and buts between now and then, obviously, right?

Mark Selby: Oh yes, yes. Nothing’s guaranteed in this space. But again, my view is we’re going to be hitting a Nickel super-cycle sometime in the mid-2020s. And so, we want to make sure that we’re as ready as possible to take advantage of that that super cycle.

Matthew Gordon: Okay. And when we talked previously, you talked about this kind of, and I think you mentioned at the beginning; this high-grade core, which you would look to focus on initially just in terms of the ability to positively affect the numbers out of the gate again. What do you know today about your ability to be able to do that?

Mark Selby: Within the release and the presentation, there is a slide with a series of grade shells to show how contiguous that material is. And again, it starts up at surface. So we won’t know exactly how much we’ll be able to pull in early, but based on the geometry of where it’s sitting, it looks quite promising on that basis. So and again, when you’ve got 98Mt of 0.34, that’s basically 8 to 10 years of ore for a large, the kind of scale mill that we’d be looking at for this type of deposit.

Matthew Gordon: Okay. Exciting times. Well, Mark, thanks for that update. I just wanted to catch up on it because I’m always interested in, well I mentioned battery metals at the moment, and obviously these are the newest stories in the marketplace and there’s been a lot of debate which you’ve helped stimulate actually with your education series, Insights series. I do appreciate that. Let us know, I might just call you at the end of this week to see how PDAC has turned out because obviously, those sorts of numbers of non-attendees is huge and quite meaningful. What do you think the wider impact is? Is it going to be short term in terms of the whole coronavirus? Because obviously, last week was a huge reset in the market. I mean huge reset. Do you think that was always coming or do you think that’s coronavirus linked?

Mark Selby: Well we needed a correction in the market place. I mean, so many stocks have just done this for a continuous period. And so we are overdue for a correction. I think the Corona virus has given people an excuse to take some profit. It is having an impact; the Chinese PMI came out over the weekend and they were in the 25 and 28 range; sort of the lowest ever recorded. So it is having a physical impact today and I think it will continue through this quarter as it kind of rolls around the globe. We’ll see that. But I think as long as we don’t get some highly, virulent evolution of that disease, so it starts killing lots of people, it’s basically a really bad flu right now. So I think we’ll have a quarter or two of impact. There’ll be a lot of government stimulus, particularly with China to help sort of restart the economy after that shock. So again, from a Nickel perspective I think it pushes out the recovery I was looking for the summer to fall, it will be pushed out another 3 to 6-months, so maybe by the end of the year, early next year we’d be able to sort of see new prices come back at that point.

Matthew Gordon: Right. And what do you think are the other…I’m just interested because you always have an opinion on these things, is around some of the smaller companies that are perhaps struggling for cash, to attract cash, who were struggling in terms of share price, et cetera; they’ve been hit pretty badly. Do you think there’s going to be some joint venture activity? There’s some takeovers and M&A, some mergers, farm-in, farm-out. What’s the impact of what’s been going on recently? Because in the Gold space, you’ve got producers producing cash, making money, losing a third or 25% of their market cap, like in a week. What’s going on?

Mark Selby: It would be a good time for companies to make some acquisitions. And again, you do have a whole group of companies, both the major mining companies are announcing, BHP had the second largest dividend in its history recently. So they have the cash to make some moves. Whether they’ll be aggressive enough to take advantage of the selloff in the market, again, those are the times when you should be buying, but a lot of companies just don’t have the to step in there when the market’s falling. So again, I would like to think that’s going to happen. I think we might get one or two deals done, but we won’t get, I don’t think there’ll be much activity. People will want to see the market bottom, see the market recover, and at that point in time, it’s time to start to step in and look at asset acquisitions at that time.

Matthew Gordon: It will be interesting. I’m very keen to see what happens over the next couple of weeks or month or so. Because there’s a few companies, I think who were on vapor before this happened, so we shall see. Always good to have a nice Spring clean. Right, Mark, thanks very much for your time today. I do appreciate that. Good luck with PDAC this week. Hope you don’t catch anything.

Mark Selby: Nope. Thank you, Sir.

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.

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Canada Nickel (TSXv: CNC) – Accelerate, c’mon babe, Pick up your speed (Transcript)

The Canada Nickel Company logo
Canada Nickel
  • 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.

We Discuss:

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.

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The Volatile Nickel Market: How Can Investors Make Money?

Nickel is a commodity with volatility at its core, but investors just want to know how to navigate this and make themselves a tidy profit. We recently interviewed Mark Selby; he helped shed a light on this.

Why not read a different nickel article once you’ve finished with this one?

History Of The Nickel Market

Nickel has always been much more volatile than other base metals. It is a large market, but not relative to copper, zinc or aluminium.

Since the 1980s, Nickel has been regarded as a boom/bust metal that moves in giant super-cycles:

A nickel price chart from 1989 to 2019.
A chequered history…
Source: InfoMine

In the late 1960s, nickel reached the equivalent of US$50/lb (in today’s dollars).

Contextually, nickel was a hot topic at the time. Rising demand, driven primarily by the Vietnam War, in association with a shortage of supply caused by industrial action at one of Canada’s largest suppliers, Inco, tipped the supply-demand scale of nickel into massive shortages and kicked prices into overdrive.

 This, in turn, led to the Poseidon bubble: a stock market bubble in which the price of Australian mining shares skyrocketed towards the end of 1969 before they crashed in early 1970. The peak was generated by the discovery of a purported promising nickel deposit by ASX-listed nickel producer, Poseidon Nickel, in September of 1969.

While the official Rae Committee report cited trading malpractice as the reason behind this bubble, it serves as a reminder to investors that nickel and volatility have always been joined at the hip.

In the 1980s, nickel went through another supercycle as supply from the Soviet Union dropped off and a new wave of demand emerged from the Asian tigers at that time, Korea and Taiwan.  Unfortunately, the collapse of the Soviet Union in the 1990s led to a complete drop in demand from a country that had been a substantial consumer, which was then followed by the influx of mass quantities of scrap into the market, generated by the collapse.

The most recent nickel crash had ramifications that remain active today. It came off the back off a price rise to over $50,000/t in 2006, as demand globally and from China outstripped supply; traditional nickel industry participants were slow to respond. This led to world warehouse stocks of nickel falling to an extremely low level. Nickel really did lose ‘touch with industrial reality’ during this period, as warned by the biggest nickel producer in the world at the time, Jinchuan Group Ltd.

The Outlook for the future

A picture of a vehicle being charged at a very modern looking EV charging port with a graphical interface in a parking lot. A future EV car concept.
The hype around the EV revolution is growing more and more rapturous.

With a decade of underinvestment in new nickel supply, in addition to the increasingly prominent electric vehicle (EV) thematic, investors can look towards a possible super cycle in the early-to-mid 2020s.

Selby himself believes we have completed “leg one, of what will be three or four legs” in terms of price increase.

But what does the evidence say? Here are some of the current market conditions Selby claims can occur before the dawn of a supercycle:

  1. A period where investment is lacking. There are several large mining companies that own a number of leading nickel assets, but they have chosen to allocate capital to non-nickel projects over the last decade. The majority of existing production has shrunk.
  2. Many of the existing nickel mines are deep underground mines or larger scale processing plants, which means they would not be able to rapidly ramp up production within a 12-month timescale. It would take multiple years to develop them. Projects need to be approved, production needs to begin, then it needs to be ramped up. In many instances, this can take at least 5 years (from announcement to full production capacity). Selby gives several examples of this.
  3. Selby says there needs to be a surge of demand, similar to what was seen in the 1960s when Japanese industry increased nickel consumption exponentially, and the 1980s, when Korea and Taiwan were industrialising. In the 2020s, EVs are the source of price-discovery-related hope. A demand growth of 4% (slower than the 5% growth seen in recent years) and a reasonable forecast of EV demand, nickel supply lead to forecasts that place nickel use between 2018-2030 at a 782000t increase on the previous 12-year period.

Now investors know some of the history, they can make more educated investment decisions in the future. You now know what you’re looking for in the market. If you buy the nickel macro story, it’s time to get busy.

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.