Canada Nickel (CNC) - Dramatically Improved Recovery Costs for PEA

Canada Nickel is advancing the next generation of high quality, high potential Nickel-Cobalt projects to deliver the metals needed to power the Electric Vehicle revolution and feed the high growth stainless steel market. The company possesses industry-leading Nickel expertise and is focused on low-risk well-established mining jurisdictions.

We caught up with Mark Selby, CEO of Canada Nickel following the recent announcement on the improved metallurgical testing results at the Crawford Nickel-Cobalt sulphide project. They have announced a 20% increase in primary grind size accomplished with no loss in recovery which results in increased throughput and lower energy costs per tonne. The release of the Preliminary Economic Assessment (PEA) is delayed until April 30, 2021 to include these significant improvements.

Announcement of improved metallurgical testing results 

Canada Nickel is delighted with this breakthrough in their mineral processing development, particularly for a deposit where this is so important, changing the grind size by 20%. This means they are effectively able to get 15% more throughput and spend 15% less on energy/tonne of rock with this change. That 15% additional throughput means 15% more Nickel for effectively the same amount of capacity. That adds a large additional amount of NPV and IRR. Selby says they would like to complete the PEA as soon as possible, but have chosen to extend that date so they can incorporate this 'major breakthrough', as these will be the project numbers used until they complete the Feasibility Study. 

It is going to be a much larger resource going into the Feasibility Study than originally thought. The PEA numbers are the numbers that are used in discussion with financiers and partners, so extending that date by 30 days is a no brainer says Selby. 

Let's Do Some Math

The PEA is the first indication of what this announcement could mean and has a 75,000t/day starting plant. 15% on top of that is c.10,000t /day which is almost 4Mt of extra ore a year and this multiplied by recovery and a grade factor which could reach an extra +10Mlbs of Nickel per year. These figures are very meaningful for the company, generating additional free cash flow which goes right on the top in terms of overall project economics so they're very excited.

Delay in the PEA

The delay in the PEA makes complete sense. If we factor in the Glencore plant deal, giving them the chance to start up with a CapEx closer to US$100M versus a $1Bn, it fundamentally changes the economics of the project relative to the other universal projects that are out there. Canada Nickel is not expecting another breakthrough between now and the end of April, so the PEA will be out by that date and we expect to be able to discuss the numbers with the company at that point. 

Resource upgrade 

The Canada Nickel team had engineered the grinding unit at Dumont, and they are using that primary grinding unit for this project. They have also had additional drilling announcements, so expect to have a big resource upgrade by the time the Feasibility Study comes through.

This resource upgrade brings about several questions as to whether they go from 1 unit to 2 units, 5 years sooner or whether they go from 2 units to 4 units or 5 units in total. They will have that amount of material available and will need to answer those questions once they’ve done the resource update.

We look forward to the PEA and the resource update on the Crawford project as the numbers look like this project is getting bigger and bigger. The shareholders seem extremely happy as the share price is looking good for Canada Nickel, and it was one of the best performing stocks on the TSXv last year.

 To find out more, go to Canada Nickel's Website.