Canada Nickel - The Only World-Class Nickel Left Amid Australian Closures

• Canada Nickel announced a new resource at Deloro, the first of seven expected resources by Q1 2025, expanding their nickel district in Timmins.
• BHP's shutdown of Western Australia nickel operations is seen as positive for Canada Nickel, reducing global supply options.
• The company is working on project financing, targeting nearly $1 billion in equity through a combination of joint venture partners, tax credits, and government funding.
• Canada Nickel is advancing engineering and permitting work on Crawford, aiming for construction decision by mid-2025.
• The CEO argues the nickel market fundamentals remain strong despite analyst pessimism, with Indonesia acting as an "OPEC of nickel" to manage supply.

About Canada Nickel

Canada Nickel Company (TSX-V: CNC) is rapidly advancing its Crawford Nickel project in Ontario while simultaneously unlocking the potential of the broader Timmins Nickel District.

The Company is a leading developer of next-generation nickel-sulphide projects, strategically positioned to meet the growing demand from electric vehicle and stainless-steel markets. It is also pioneering the production of net zero carbon nickel, cobalt, and iron products.

Interview with Chief Executive Officer, Mark Selby

Expanding Resources in the Timmins Nickel District

Canada Nickel recently announced a significant milestone with the release of its maiden resource estimate for the Deloro property. This marks the first of seven additional resources the company expects to complete by the end of March 2025, showcasing the potential of the Timmins Nickel District.

Deloro Resource Highlights:

• 81 million tonnes at 0.25% nickel in the Indicated category
• 357 million tonnes at 0.25% nickel in the Inferred category
• Combined resource containing over 1 million tonnes of nickel

CEO Mark Selby emphasized the significance of this discovery:

"If you add that indicated and inferred together, you're looking at over a million tons of contained nickel, which again would make it one of the largest discoveries of the last 20 years."

This resource expansion strategy aligns with Canada Nickel's vision to establish the Timmins region as a world-class nickel sulfide district. The company's land package covers approximately ten times the geophysical footprint of its flagship Crawford project, suggesting substantial exploration upside.

Crawford Project: Cornerstone Asset

While the district-scale potential is compelling, Canada Nickel's near-term focus remains on advancing its Crawford Nickel project. Crawford is already considered one of the world's largest undeveloped nickel sulfide deposits, ranking in the top five globally.

Key aspects of Crawford's development include:

• Front-End Engineering Design (FEED): The company has progressed beyond the feasibility study stage and is now conducting detailed engineering work. This process aims to optimize the project and prepare for long-lead equipment orders.
• Permitting: Canada Nickel is in the second phase of the federal permitting process. The environmental impact statement is expected in September 2024, and the company anticipates receiving necessary permits by mid-2025.
• Financing Strategy: The company is pursuing a financing package that includes equity at the project level, government support, and strategic partnerships.

Market Dynamics & Supply Constraints

Recent developments in the global nickel market have created a favorable backdrop for Canada Nickel's projects. The announcement by BHP to shut down its Western Australia nickel operations until at least 2027 has significant implications for the supply landscape. Mark Selby views this as a positive development for Canada Nickel:

"In fact, it is the absolute best news for us. It's an indictment on the cost structures and underinvestment those assets had for 20 years under BHP stewardships."

This closure and geopolitical constraints on Russian and Chinese production leave a substantial gap in the global nickel sulfide supply. Selby argues that this creates a clear runway for new projects like Crawford to meet growing demand from electric vehicle and battery manufacturers.

A key factor shaping the nickel market is Indonesia's growing dominance in production. Selby parallels OPEC's influence on oil markets, stating: "Indonesia controls more of the nickel market than OPEC did at its peak."

However, he also highlights potential challenges with Indonesian production:

• Environmental concerns and sustainability issues
• Declining ore grades and more complex chemistry
• Increasing production costs establishing a price floor

These factors contribute to Selby's optimistic outlook on nickel prices and the competitiveness of projects like Crawford.

Financing Strategy & Government Support

Canada Nickel is pursuing an innovative financing strategy to minimize dilution at the parent company level while securing the necessary capital to advance Crawford. Key elements of this approach include:

• Project-Level Equity: Targeting up to $1 billion in equity investment at the Crawford project level.
• Refundable Tax Credits: Leveraging Canadian government incentives for critical minerals and carbon capture, potentially providing over $600 million in project equity.
• Strategic Partnerships: Building on existing relationships, such as the option agreement with Samsung SDI for a 10% project stake.
• Government Funding: Exploring additional support given the increasing focus on critical minerals as a national security issue.

Selby emphasized the unique opportunity presented by current market conditions:

"Today's market with the government funding that's available is a once-in-a-generation opportunity to create multi-decade, multi-decades worth of value with a very small amount of equity capital."

Technology & Intellectual Property

Canada Nickel's development of Crawford has generated valuable intellectual property and expertise in processing ultramafic nickel deposits. This knowledge base positions the company to advance its pipeline of regional targets efficiently.

Selby highlighted the rarity of large-scale nickel sulfide discoveries:

"The biggest high-grade discovery in the last 20 years was only 250,000 tons. To return to a million-ton high-grade sulfide discovery, you have to go back to Voisey's Bay 30 years ago."

This scarcity of new discoveries, combined with Canada Nickel's growing portfolio and technical expertise, creates a significant competitive advantage for the company.

Environmental & ESG Considerations

Canada Nickel's projects benefit from their potential to produce "clean, green nickel" in contrast to what Selby terms "blood nickel" from some overseas operations. The company's ultramafic deposits have the added benefit of natural carbon sequestration properties, aligning with growing demands for environmentally responsible mining practices. Selby argues that this positions Canada Nickel favorably with both governments and end-users:

"That's not what people want to see in the energy transition, and that's not what consumers want to buy."

Near-Term Catalysts & Milestones

Investors considering Canada Nickel should be aware of several potential catalysts over the next 12-18 months:

• Release of additional resource estimates from regional properties
• Advancement of Crawford engineering and optimization
• Progress on permitting milestones
• Announcements related to project financing and strategic partnerships
• Potential spin-out or joint venture agreements for regional assets

Canada Nickel presents a compelling opportunity for investors seeking exposure to the critical minerals sector, particularly nickel. The company's flagship Crawford project, combined with its district-scale potential in the Timmins region, positions it as a significant player in the global nickel market.

The Investment Thesis for Canada Nickel

• World-class asset: Crawford is one of the largest undeveloped nickel sulfide deposits globally, with district-scale potential in the Timmins region.
• Supply gap opportunity: BHP's closure of Western Australian operations and geopolitical constraints on Russian/Chinese production create a favorable supply backdrop.
• Clean, green nickel: Canada Nickel's projects align with the growing demand for environmentally responsible sourcing of battery materials.
• Innovative financing strategy: Focus on project-level equity and government support to minimize shareholder dilution.
• Multiple near-term catalysts: Resource expansions, engineering milestones, and potential strategic partnerships provide numerous value-creation opportunities.
• Experienced management: Team with a track record in nickel development and a clear vision for building a world-class nickel district.
• Leverage to nickel prices: As a development-stage company, Canada Nickel offers significant leverage to improve nickel market fundamentals.

Canada Nickel stands at the forefront of a potential transformation in the global nickel supply landscape. With its flagship Crawford project and expanding resource base in the Timmins Nickel District, the company is well-positioned to capitalize on the growing demand for responsibly sourced battery materials. While challenges remain in terms of project financing and development, the company's strategic approach to minimizing dilution and leveraging government support creates a unique value proposition. As the electric vehicle revolution continues to drive demand for critical minerals, Canada Nickel's focus on producing environmentally responsible nickel in a stable jurisdiction could prove increasingly attractive to both investors and end-users. The coming months will be crucial as the company works to advance Crawford towards a construction decision and unlock the value of its broader asset portfolio.

The Nickel Market's Green Revolution

The global transition to clean energy and electric vehicles is driving a fundamental shift in the nickel market. As battery manufacturers and automakers seek to secure long-term supplies of responsibly sourced materials, the demand outlook for nickel – a critical component in high-performance batteries – remains robust.

However, the supply side of the equation is becoming increasingly complex. Traditional nickel sulfide mines, which produce the highest-quality material for batteries, are facing depletion and underinvestment. The recent announcement of BHP's closure of its Western Australian operations highlights this trend, potentially removing a significant source of "clean" nickel from the market.

Simultaneously, the rapid expansion of nickel production in Indonesia has raised concerns about environmental sustainability and the carbon footprint of the battery supply chain. This creates a potential bifurcation in the market between "clean, green nickel" from stable jurisdictions and what some industry participants term "blood nickel" from less regulated environments.

This dynamic presents a unique opportunity for companies like Canada Nickel, which are developing large-scale, low-carbon nickel projects in mining-friendly jurisdictions. The growing emphasis on ESG considerations in investment and procurement decisions further strengthens the case for these projects.

Government support for critical minerals development adds another layer to this thematic. As countries seek to secure domestic supply chains for strategic materials, projects that align with these goals may benefit from financial incentives and streamlined permitting processes.