Canada Nickel (CNC) - World's Largest Carbon Credit Company?

Canada Nickel Corp. 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. 

Matt Gordon caught up with Mark Selby, Chairman, CEO, and Director, Canada Nickel. Mark previously served as the President and CEO at RNC (Royal Nickel Corporation) Minerals where he successfully raised over $100M to advance the Dumont nickel-cobalt project. Mark has been a leading authority in the nickel markets since 2001. He has served as a board member for several mining companies. 

Company Overview

Canada Nickel is advancing the new 100% owned Crawford nickel-cobalt sulphide discovery with large-scale potential located in the established Timmins mining camp adjacent to major infrastructure. The company was founded in 2019 and is headquartered in Toronto, Canada. The company is listed on the Toronto Stock Exchange (TSX-V: CNC). It was one of the best performers on TSX in 2020, as its share value jumped from $0.25 to $3.00 within a short timeframe. 

Canada Nickel's Crawford Nickel-Sulphide discovery is one of the largest Nickel-Sulphide discoveries in the past few years. The company recently announced 18 acquisitions to pick up 13 additional targets for consolidating one of the world's most important nickel districts situated around Timmins, Ontario. 

The company has been working on these new targets for the past 6 months. The targets are situated in a region that features a unique geophysical footprint. The company analyzed the historical drill data that was available through the geological survey. Out of the 13 targets, the company has made at least half a dozen discoveries so far. 

Canada Nickel highlighted the presence of a distinct geological footprint, similar to Crawford in the targets in a 35-page press release. Only one of the targets did not yield a hole though it indicated the presence of serpentinized dunite or serpentinized peridotite. The company's targeting was close to 95% accurate in terms of geophysical anomaly, hitting the right host mineralization. 

Upon reaching the second level, the company found that 10 of these targets are larger in size than Crawford. The region featured a series of drill holes that were done in the 50s, 60s, 80s, 90s, and 2000s. The company can now demonstrate that the targets have been delineated by 500m-1km and feature host mineralization similar to the Timmins area. Based on the limited assays, it was found that these reserves feature 0.3% high-grade nickel. 

As the rock serpentinizes to create nickel, the process also creates magnetite. This magnetite lights up under a certain magnetic intensity range. Steve Balch, Vice President of Exploration, Canada Nickel helped sort the raw geophysical data and tuned the magnetic intensity to identify these underlying deposits. Although the company hasn't picked up all the targets, it was surprised by the accuracy of serpentinized dunite and peridotite targeting that was achievable through this methodology. 

The company also found areas within the region that weren't drilled before the 70s. There were several discoveries around the Timmins area that were present at the edge of the structures. These discoveries led to the extensive drilling that was carried out in the 70s and 90s around the edge of the structures to attain over 1% nickel deposits. 

The last hole company drilled hit at a depth of 150m with 0.3% nickel on the edge. This hole is a 2km by 400m anomaly or a 6km by 300m anomaly. These discoveries bring the project within the top 10 globally in terms of size. In fact, the deposit features an even larger geophysical footprint than the Crawford asset. 

Targets 2021 and Beyond

Canada Nickel is looking to prioritize the Crawford deposit, with a Feasibility Study planned by the end of 2022. The company intends to run detailed geophysics at the regional properties and then commence drill operations. It is aiming to increase the Crawford resource by 50-100%, bringing the overall resource to 2-2.5Bnt. The additional 500Mt will not be part of the mine plan as it won't serve to add value. 

The company seeks to demonstrate that these regional acquisitions will lead to a 1.2-1.5 times project value for the existing NPV (Net Present Value). To showcase the potential, the company has an aggressive drill program planned. 

Once the Crawford deposit is fully-evaluated, the company anticipates that its share price would jump multi-folds. Following this, the company will focus on raising capital to fund an extensive drill program. The company is prioritizing potential over a resource at this point in time. 

M&A Considerations

Canada Nickel is open to offloading the project in the future. However, currently, it is looking to bring a strategic partner on board by the end of next year. The asset has distinct characteristics that make it favorable for acquisition by a major. This district-scale project is a multi-decade, multi-expansion asset with several high-potential nickel targets. Additionally, the deposit benefits from a well-built infrastructure, with close proximity to highways, railways, and power lines. 

Canada Nickel is looking to bring in a strategic partner on board with a 10-15% stake. The company is seeking a strategic partner with a strong investment ability to unlock the potential of the Crawford asset. This will enable the company to become a global producer for the 3rd generation of nickel supply. 

Carbon Credits

The asset features rocks that have the ability to spontaneously absorb CO2, a significant upside from a carbon credits perspective. The company continues to demonstrate the scale of the project. At the Crawford asset, the 900Mt resource is present within the main zone that is spread under 1 square kilometer of the geophysical footprint. 

The recent acquisition by the company was a 37 square kilometer area that features a similar geophysical footprint along with 40 times higher resources. This region also features rocks that can spontaneously absorb CO2, making it a highly sustainable and carbon-conscious nickel mining operation. This operation will generate significant value in carbon credits for the company. 

A New Generation of Nickel Supply

Canada Nickel's Timmins district has the potential to generate high-grade nickel reserves with a significantly lower carbon footprint compared to other nickel operations. This operation will provide a large-scale nickel supply to the EV (Electric Vehicles) market and consumers in the western hemisphere that are seeking new sources of nickel. This would also reduce the dependence on Indonesia and China for nickel sourcing. 

A recent announcement by the Indonesian government to limit permits for NPI (Nickel Pig Iron) projects led to a 10% spike in nickel's market price. This move was a way for the government to limit exports for nickel to conserve the nation's nickel resource. 

This announcement has serious ramifications for the Western car companies as a major portion of nickel supply is sourced from Indonesia. As the nickel supply for the West has been shrinking for the past decade, North American car companies are seeking new sources of supply at the earliest to sustain production. 

Canada Nickel has multiple deals in place with companies including Glencore along with optionality. This places the company in a strong position to advance and grow its assets.

‍To find out more, go to the Canada Nickel Website