Canada Nickel (CNC) - NEW Q2 2022 Resource Aiming for Top 5 Globally

Canada Nickel Company is a Canadian exploration company focused on its flagship asset, the Crawford Nickel Sulphide Project, located in the Timmins mining camp, Canada. The project is a bulk tonnage opportunity with mineralisation similar to that of the Dumont Nickel deposit. The project has easy access to various infrastructures including grid power, water and an established mining community.

Matthew Gordon spoke with Mark Selby, the Chairman, CEO and Director of Canada Nickel Company (TSX-V: CNC) to discuss the company’s recent decline in share price.

Company Overview

The company previously announced that it plans to involve a strategic investor, which will be able to give confidence to the company as well as showcase the necessity of the project to the market. The company still intends to do so but is in the financial position to take its time regarding the selection of the correct strategic investor. Canada Nickel Company is fully funded for its planned activities in the coming year, which allows the company to carry out its due diligence ensuring that it involves the correct strategic investor.

The share price of the company recently decreased from approximately CAD$ 3.30 to CAD$ 2.60. Canada Nickel Company accredits the drop in its share price to the distribution of 3.5 million shares of the company owned by Noble Mineral Exploration Inc. to its shareholders on a pro-rata basis. The drop in share price comes as a surprise to various investors, especially as the company recently announced it had concluded with a CAD$ 51.6 million bought deal public offering.

The company plans to continue advancing the Crawford Nickel Sulphide project in the coming year through various initiatives including an updated mineral resource, feasibility study and initiating the project’s permitting process.

Management

Canada Nickel Company is led by Mark Selby, who is the CEO, director and the chairman of the company’s board. Selby was responsible for leading the team that advanced the Dumont nickel-cobalt project of RNC Minerals (Royal Nickel Corporation) from an initial resource to a fully permitted, construction-ready project in his time as president and CEO of the company. He also raised approximately USD$ 100 million during his time at RNC Minerals. Selby is recognised as one of the world’s leading authorities on the nickel market.

Wendy Kaufman is the company’s chief financial officer (CFO) and has over twenty-five years of experience leading junior and mid-tier publicly-listed mining companies in project financing, capital structuring, capital markets, accounting and internal controls, tax, and financial reporting and public disclosure. She is accredited with completing a USD$ 4 billion finance package for Cobre Panama during her time at Inmet Mining and has previously also been the CFO of various companies including Khiron Life Sciences Corporation, Pasinex Resources Limited, Primero Mining Corporation and Inmet Mining Corporation.

Steve Balch is the vice president (VP) of exploration for the company. Balch is a registered geoscientist and holds more than 32 years of experience in the geological field. Balch is an expert in the implementation of magnetic and electromagnetic methods as well as large exploration compilations. He is also the founder of Triumph Instruments and developed the AirTEM system, a multi-coil helicopter-borne EM system that is now in use in Mexico, China, Canada and Eastern Europe.

Christian Brousseau is the vice president of capital projects and brings with him over 30 years of engineering, design, and construction experience in the Canadian mining industry. Brousseau joined the company in 2020 as project director and was charged with leading the development of the Crawford Nickel Sulphide project to a preliminary economic assessment (PEA) stage. The PEA was successfully concluded in the middle of 2021.

Pierre-Philippe Dupont is the vice president of sustainability for the company and has more than 15 years of experience in leading efforts to successfully acquire environmental, community stakeholders and First Nation approvals for mining projects. Dupont was responsible for the permitting of the Dumont Nickel project during his time at RNC Minerals, with his approach now applied as a model. He has also been involved in the Canadian Malartic Gold Mine and the Canadian Royalties Nickel Mine permitting processes and previously served as the director of sustainability at Glencore’s Horne Copper smelter.

Esmond Tranquilla is the project director of the company and has been involved in the management of major capital projects such as large-scale mines, processing plants and various infrastructure projects in Canada and the USA for over 30 years. He previously held the position of director of construction for SNC-Lavalin North America.

John Leddy is the company’s senior advisor on legal and strategic matters and has over 20 years of experience as a business lawyer. He is well versed in private equity, with him specialising in mergers and acquisitions (M&A), capital raising and structuring, and other strategic transactions.

David Smith, Francisca Quinn, Jennifer Morais, Kulvir Singh Gill, Mike Cox and Russell Starr serve as directors of the company. Smith is the senior vice president of finance and chief financial officer (CFO) of Agnico Eagle and has held the position since 2012. Quinn is an expert in sustainability in business and capital markets. Morais is an expert in the global private equity and alternatives industry which includes global mining finance and management. Kulvir Singh Gill is an expert in leading innovation and growth projects for companies in the mining, oil and gas and heavy industrial sectors. Cox has over thirty years of experience in base metal operations, which includes the oversight of operations which have delivered nickel products to consumers for use in multiple generations of nickel batteries. Starr rounds out the team and has over nineteen years of corporate finance, investment and business development experience. He has held senior positions and advisory roles with various financial institutions including RBC Capital Markets.

The management and board are tasked to advance the company’s Crawford Nickel Sulphide project into one of the largest base metal operations in the world.

Crawford Nickel project

The Crawford Nickel Sulphide project of the company is situated within the Timmins-Cochrane Mining Camp in north-eastern Ontario, Canada. The region has a long mining history producing gold, nickel, zinc, lead and various other minerals. The Crawford Nickel Sulphide project has a land package of approximately 55.14 km2 which consists of both patented and unpatented mining claims.

The project has access to various infrastructures and is easily accessible by road. The possibility also exists to use the Kidd Creek mill, owned and operated by Glencore PLC to enable a small-scale operational start-up. The project hosts the potential for a bulk tonnage operation, with similar mineralisation to that of the Dumont Nickel Deposit.

Canada Nickel Company published a preliminary economic assessment (PEA) of the project in July 2021. The PEA was based on 76 drill holes which totalled approximately 32,293 m of drilling.

The PEA showed a 25-year life of mine (LOM) with a phased 120,000 tons a day open-pit mining operation. The project is envisioned to implement a conventional nickel sulphide processing circuit which will produce nickel concentrates and magnetite concentrates.

The project is expected to produce 842,000 tons of nickel, 21 million tons of iron and 1.5 million tons of chrome throughout its 25-year lifespan. The PEA further showed an after-tax NPV8% of USD$ 1.2 billion with an after-tax internal rate of return (IRR) of 16%. The project’s annual earnings before interest, taxes, depreciation and amortisation (EBITDA) is estimated to be USD$ 439 million with an annual free cash flow of USD$ 274 million. Canada Nickel Company plans to minimise the carbon footprint of the Crawford Nickel Sulphide project through the implementation of various technologies with its aim being to reach a net-zero carbon footprint operation. The project is also estimated to be within the top 5 largest nickel sulphide operations in the world as well as one of the largest base metal operations in Canada.   

Capital raise and share price

Canada Nickel Company announced in April 2022 that it had concluded with a bought-deal public offering, which led to gross proceeds of CAD$ 51,554,156.70 for the company. The bought-deal offering consisted of 10,440,050 common shares of the company sold at an issue price of CAD$ 3.10 per common share, 3,424,658 flow-through (FT) shares of the company at an issue price of CAD$ 3.65 per FT Share and 1,500,000 charity flow-through shares at an issue price of CAD$ 4.46 per charity flow-through share.

The offering was completed in accordance with an underwriting agreement dated March 14, 2022, which it entered into with various underwriters led by Red Cloud Securities Inc. The proceeds from the sale of the flow-through shares will be used by the Company to incur eligible Canadian exploration expenses that will qualify as flow-through mining expenditures, with the proceeds of the common shares to be implemented towards the advancement of the Crawford Nickel Sulphide project towards a feasibility study as well as towards general corporate and working capital purposes.

The share price of Canada Nickel Company however was hindered and dropped to CAD$ 2.60 after the announcement of the successful bought-deal finance offering. The company accredits the drop in share price to Noble Mineral Exploration Inc. distributing 3.5 million shares of the company to its shareholders on a pro-rata basis.

Exploration results

The company announced in early April 2022, that it had concluded the infill drilling program it conducted at its Crawford Nickel Sulphide project. The infill drilling program consisted of 70 drill holes and was able to test the project’s mineralisation to a depth of 1 km. The infill drilling program was also able to intercept the highest-grade mineralisation to date at the project. The high-grade mineralisation consists of a 64.5 m interval at a grade of 0.71% Nickel starting at a depth of 472.5 m and includes a 6 m interval at 1.04%.

The infill program also succeeded in extending the mineralisation of the project’s East zone by 33% to a strike length of 2.8 km. The PGM zone of the project also continues to expand, with infill drilling showing 1.4 g/t PGM over an intercept of 11.4 m which includes a mineralisation interval of 2.5 g/t PGM over 3 m.

Future

Canada Nickel Company believes that when the noise of Noble Mineral Exploration Inc. dies down, the investment community will continue to see the Crawford Nickel Sulphide project for what it is, potentially one of the largest base metal projects in Canada and one of the 5 largest nickel sulphide projects globally.

The infill drilling program at the Crawford Nickel Sulphide project will be implemented towards a new mineral resource estimate (MRE) of the project, which will be published by the end of Q2 2022. The updated mineral resource estimate will be used to create and publish a feasibility study of the project by the end of Q4 2022.

The company plans to submit the initial project description, which will formally initiate the consulting process as well as the permitting process in the coming year as well. Canada Nickel Company continues to search for a strategic investor which will, according to the company, give confidence to the company but also showcase the necessity of the project to the market.

To find out more, go to the Canada Nickel website