Canada Nickel (CNC) - Lays Out its Business Case
Canada Nickel is a resource company advancing the next generation of high-quality exploration projects across Canada, including the new 100% owned Crawford nickel–cobalt PGM project. The company’s flagship project is located in Ontario’s Timmins mining camp, which includes major mining infrastructure such as the Kidd Creek Mill and Hoyle smelter and refinery.
Mark Selby, CEO of Canada Nickel recently gave a presentation at Roundup where he talked through the roundup case for Nickel, the current state of the market, some of the players involved and how they hope to time this super-cycle right as part of their accelerated delivery programme. An interesting presentation with many key points regarding the Nickel market and the business case for Canada Nickel as a whole which we summarise here.
A Nickel super cycle
The Canada Nickel Crawford Nickel Cobalt Sulphide discovery is one of the most important Nickel Sulphide discoveries in several decades and one of the most important base metal discoveries in Canada.
Nickel is about to start a new super cycle which happens every few decades. This was the driver behind the exploration of the Crawford project a few years ago. We saw a Nickel super cycle in the late 60s, the late 80s, the mid-2000s and are on the verge of a new one coming in the mid-2020s. The Nickel industry has huge demand coming down the pipeline from groups like Tesla, who alone are going to need a 1Mt to 1.5Mt a year by 2030. Current global production is 2.5Mt of Nickel a year. The problem is obvious as Tesla is just one company. However, the last +1Mt Nickel Sulphide discovery was Voisey’s Bay in 1992, nearly 30 years ago.
Crawford was discovered in late 2018, just north of Kidd Creek and Timmins was a 3-way joint venture between Noble Mineral Exploration, Spruce Ridge Resources and some private investors. The exploration team was led by Canada Nickel’s Steve Balch with contributions from Randy Singh from Noble Minerals, from Colin Bowdidge from Spruce Ridge. The exploration manager on the ground was Bill McCrae from Canada Nickel who identified the best target within a number of targets then drilled the first 4 discovery holes in late 2018, which led to the Crawford project as we know it today as the largest Nickel Sulphide discovery since the early 1970s.
Growth in the Nickel market
Nickel has always been a very high demand metal, it's grown at more than 4% to 5% a year for many decades and that growth is expected to continue going forward, driven by Stainless Steel more than EVs at this point. Then the EV sector is forecast to require over a 1Mt of Nickel by 2030. Glencore recently provided their end of year investor update and in that forecast, talk about Nickel demand to 2050 where they forecast 9Mt of Nickel within 30 years. That compares to just 2.5Mt today and shows the scale of the Nickel requirements that we’re going to need going forward.
If future EV demand is combined with the already continued strong demand growth in Stainless Steel, we will need to double supply by 2030 from the position in 2018 which is why a Nickel super cycle is anticipated this decade. There is currently very little Nickel supply outside of Indonesia hence the need to find and get into production a Nickel deposit, particularly one the size of Crawford.
World Nickel Supply
Over the last 5 years, Nickel supply growth has come from Nickel Pig Iron (NPI) production in Indonesia. NPI production requires a lot of power and all that power comes from coal-generated electricity. As a result, 25t to 30t of coal is required per tonne of Nickel, which generates nearly 90t of CO2 per tonne of Nickel.
Sulphide discoveries are important as Sulphide deposits are lower Carbon and data from large, low-grade Sulphide deposits have a much lower Carbon footprint than a lot of other Nickel operations.
Nickel Sulphide discoveries
Nickel Sulphide discoveries over the last 20 years are roughly half the scale of the Sulphide discoveries of the prior generation. It is important to find new Nickel Sulphide discoveries as the Nickel project pipeline is empty and there is a need to deliver the Nickel that the EV market is going to require in the coming decade. Sulphides have a number of advantages versus Laterites. They use standard mine mill facilities and are inherently less energy-intensive than a Laterite deposit and the Sulphur self-provides the fuel to help with the further downstream processing. This means they have a lower Carbon footprint.
The last high-grade Sulphide discovery was Voisey's Bay in the early 1990s and the two best discoveries of the past decade, Nova-Bollinger and Sakatti are too small to be of much consequence to Nickel supply. Large Sulphide discoveries are needed to be the source of Nickel outside of Indonesia.
Canada Nickel Crawford Nickel Cobalt Sulphide Project
The Canada Nickel Crawford discovery is already reaching close to 3Mt across all categories and the mine can be open-pit so is much more readily scalable to keep up with the expected market growth that we see going forward. The Crawford project is based in Timmins which is an area of zero Carbon hydroelectricity so this Nickel that has a low Carbon footprint will be a premium product going forward.
Crawford doesn’t need any capital spent on infrastructure as is based next to all the infrastructure it needs, just north of Timmins. Noble Mineral Exploration had acquired a large land package from a forestry company where they completed an airborne mag survey. They didn’t discover any massive Sulphides, but they did highlight the potential for larger low-grade Nickel deposits. There are lots of mag highs in this area. The team flew a suite of geophysics and then were looking for that mag high, gravity low combination which they did find in the very large Crawford Nickel intrusion.
After flying the geophysical survey the team decided to drill 4 holes into the Crawford targets, the results of which highlighted the potential for Crawford as a world-class Nickel Sulphide discovery. Crawford was a very large target which had large intervals of Nickel Sulphide mineralisation with the potential for a higher grade core.
A lot of the other Sulphide projects don’t have this higher grade potential for a starter pit. If you’re able to fill the mill with 3, 5, 7 years of higher grade material, the economics are going to be significantly better. The Crawford project also had the right amount of Sulphur available on the system.
Canada Nickel filed its maiden resource at the Crawford project in February 2020, including a measured and indicated resource of approximately 263Mt at 0.31% nickel, 0.013% cobalt, and 0.038g/t palladium and platinum.
The company then provided a mineral resource update for the project in October 2020. One highlight from the resource update, shows that higher-grade core potential has now been realised as over 200Mt at 0.34% Nickel, which will be the key source of feed for the mine plan as they move into the subsequent engineering studies, to be able to advance the project going forward. So, the drilling that they started just over a year ago has now translated into one of the world’s largest Nickel Sulphide resources globally. On top of the Crawford project, Canada Nickel has also picked up 5 other option properties from Global Mineral Exploration. They believe that they have the potential for multiple assets the scale of Crawford and are setting out to prove that in 2021 and 2022.
Canada Nickel further exploration
They expect to be drilling one or more of these targets during this coming winter and believe they will be able to turn this into a district with multiple large Nickel Sulphide deposits going forward. These deposits will be perfectly timed for the strong Nickel market in the coming decade.
Crawford is the largest discovery since the early 1970s and Canada Nickel has a huge amount of potential going forward with Crawford and the other 5 targets ahead. Crawford is a large-scale discovery, in a good jurisdiction in Ontario, in an established mining camp just north of Timmins, adjacent to all the major infrastructure. The company has support from the community and local First Nations groups to commit to larger-scale mining activities.
In a world where it has become more and more challenging to get large-scale mining projects built, Canada Nickel is in a good place in the world for a mining project.
To find out more, got to Canada Nickel's Website.