Canada Nickel Unlocks Nickel District with Billion Dollar Government Support & Strategic Partnerships

• Canada Nickel is advancing the Crawford nickel sulfide project and working to unlock the Timmins nickel district.
• The company has secured nearly $900 million USD in debt financing commitments from Export Development Canada and another financial institution.
• Canada Nickel is targeting a total financing package of $2.5 billion, including $1.5 billion in debt and $1 billion in equity.
• The company expects to receive over $600 million in refundable tax credits from the Canadian government for critical minerals and carbon capture.
• Canada Nickel has a $100 million option agreement with Samsung for 10% of the project and 30% of off-take, and is working to secure additional strategic partners.

Canada Nickel Company is making significant strides in advancing its Crawford nickel sulfide project and unlocking the potential of the Timmins nickel district in Ontario, Canada. With a combination of government support, strategic partnerships, and innovative financing approaches, the company is positioning itself to become a major player in the North American nickel market.

Nickel District with Government Support & Strategic Partnerships

The Crawford nickel sulfide project is at the heart of Canada Nickel's ambitions. In the Timmins mining camp of Ontario, Crawford is poised to become a significant source of nickel for the North American market. The company's CEO, Mark Selby, recently provided insights into the project's financing progress and future prospects.

Debt Financing Commitments

Canada Nickel has made substantial headway in securing debt financing for the Crawford project. The company recently announced a letter of intent from Export Development Canada (EDC) for $500 million USD. This commitment is particularly significant as EDC has agreed to be the mandated lead arranger for a larger debt facility. Selby elaborated on the importance of this development:

"With EDC's involvement, that gives us visibility on the full $1.5 billion debt package."

In addition to the EDC commitment, Canada Nickel has secured a $500 million CAD commitment from another financial institution. Combined, these commitments amount to around $900 million USD in potential debt financing.

Equity Financing & Government Support

Canada Nickel is targeting approximately $1 billion on the equity side of the financing equation. A significant portion of this is expected to come from government support through refundable tax credits. Selby explained:

"We have over US$600 million in refundable tax credits that will come to us from the federal government. There may be other one-off government money, but in legislation, there are programs that we qualify for that we know would provide US$600 million in funding."

These tax credits relate to critical mineral development and carbon capture and storage, aligning with the Canadian government's strategic priorities in these areas.

Strategic Partnerships

Canada Nickel has also secured strategic partnerships to support its financing efforts further. The company announced a US$100 million option agreement with Samsung in January. Under this agreement, Samsung would acquire 10% of the project for 30 off-take. Selby highlighted the importance of this partnership:

"We announced in January that we've got a US$100 million option with Samsung if they buy 10% of the project for that amount for 30% of the off-take. And they're keen to get off-take."

With these commitments, Canada Nickel is now focused on securing the remaining US$300-400 million in equity financing. The company is working with Scotiabank and Deutsche Bank to identify potential strategic partners or offtake agreements that could provide upfront funding.

Interview with Chief Executive Officer, Mark Selby

Government Support & Market Dynamics

The significant government support for the Crawford project underscores the strategic importance of domestic nickel production in North America. Selby emphasized the unique opportunity this presents for investors:

"This is a once-in-a-generation opportunity to take advantage of the large flows of government money that are coming into the space that allow you as a retail investor to get a bunch of free leverage from the government to be able to build a project that's going to last. In the case of Crawford, at least 40 years."

The Canadian government's support comes in various forms, including the aforementioned tax credits and potential loan guarantees. These incentives not only reduce the overall cost of capital for the project but also demonstrate the government's commitment to developing a domestic supply chain for critical minerals.

Market Demand & Future Prospects

The demand outlook for nickel, particularly from the electric vehicle (EV) and energy storage sectors, remains strong. Selby highlighted the scale of the opportunity:

"The market needs 10 Crawfords to be able to satisfy that demand. On the other side of the fence, in the traditional stainless and alloy markets, the big chunk of those are very strategic type industries. They will not want to use Indonesian or Chinese material to supply what they need."

This demand dynamic positions Canada Nickel favorably, as Western consumers seek alternatives to Chinese-controlled nickel supply. The company's focus on environmentally responsible production methods also aligns with growing ESG concerns among investors and end-users.

Project Timeline & Next Steps

Canada Nickel is working towards a construction decision for the Crawford project by mid-2025. To achieve this timeline, the company aims to have the majority of its financing package in place by the end of the current year. This would allow for the commencement of long-lead item procurement and detailed engineering work in 2024.

Selby outlined the near-term objectives: "The goal here is to have one over the line by year-end. We want to be in a position that when those permits come mid, when we expect them mid next year, that we're ready to go with the full financing package."

Implications for Investors

The progress made by Canada Nickel in securing financing for the Crawford project presents several implications for investors:

• Government Support as a Catalyst: The substantial government support, particularly in the form of refundable tax credits, significantly de-risks the project and enhances its economic viability. This support is likely to continue given the strategic importance of domestic nickel production.
• Strategic Partnerships: The involvement of major players like Samsung demonstrates industry confidence in the project and provides a potential model for future partnerships in the sector.
• Financing Innovation: The company's approach to financing, leveraging a mix of government support, strategic partnerships, and traditional project finance, could serve as a template for other critical mineral projects in North America.
• Market Positioning: As one of the few large-scale nickel projects advancing in a stable jurisdiction, Crawford is well-positioned to capture growing demand from both the EV and traditional alloy markets.
• ESG Considerations: The project's focus on environmentally responsible production methods aligns with growing investor and consumer preferences for sustainably sourced materials.

Challenges & Risks

While the outlook for Canada Nickel appears promising, investors should be aware of potential challenges and risks:

• Execution Risk: Developing a large-scale mining project always carries execution risks, including potential delays or cost overruns.
• Market Risk: While the long-term demand outlook for nickel is strong, short-term price volatility could impact project economics.
• Financing Risk: Although significant progress has been made, the company still needs to secure the remaining equity financing to fully fund the project.
• Regulatory Risk: Changes in government policies or delays in permitting could impact the project timeline.
• Technology Risk: The success of the project partly depends on the effective implementation of carbon capture and storage technology, which is still evolving in the mining sector.

Canada Nickel's progress in advancing the Crawford project represents a significant development in the North American critical minerals sector. The company's ability to leverage government support, secure strategic partnerships, and innovate in its financing approach positions it well to capitalize on the growing demand for responsibly sourced nickel. As Selby noted:

"Given that scale of market opportunity, to be in a position to have the only large-scale source of nickel available that doesn't come from Chinese-controlled entities is a tremendous opportunity."

For investors, Canada Nickel offers exposure to a strategic asset in a stable jurisdiction, backed by substantial government support and aligned with long-term market trends. While risks remain, the company's progress to date and the strategic importance of the Crawford project make it a compelling opportunity in the critical minerals space.

The Investment Thesis for Canada Nickel

• Strategically Located Asset: Crawford is positioned to become a major nickel supplier in North America, a region actively seeking to reduce dependence on Chinese-controlled supply.
• Government Support: Significant backing from the Canadian government through refundable tax credits and potential loan guarantees reduces project risk and enhances economic viability.
• Strong Demand Outlook: Growing demand from both EV and traditional alloy markets underpins the long-term potential of the project.
• ESG Alignment: Focus on environmentally responsible production methods, including carbon capture and storage, aligns with investor and consumer preferences.
• Innovative Financing Approach: The company's ability to secure diverse funding sources demonstrates financial innovation and reduces reliance on any single source of capital.
• Strategic Partnerships: Involvement of major players like Samsung validates the project's potential and opens doors for future collaborations.
• Scalability: The Timmins nickel district offers potential for additional projects beyond Crawford, providing growth opportunities.
• Experienced Management: Led by industry veteran Mark Selby, the management team has a track record in nickel project development and financing.

Macro Thematic Analysis

The advancement of Canada Nickel's Crawford project is set against a backdrop of significant macro trends in the global metals and mining sector, particularly in the context of the energy transition and supply chain security.

The push for electrification, driven by climate change concerns and government policies, is creating unprecedented demand for battery metals, including nickel. This demand is not only coming from the rapidly growing electric vehicle sector but also from the broader energy storage industry, which is crucial for the integration of renewable energy sources into power grids.

Simultaneously, there is a growing recognition among Western nations of the need to secure supply chains for critical minerals. The dominance of China in the processing and refining of many of these minerals has raised concerns about supply security and geopolitical risks. This has led to a renewed focus on developing domestic sources of critical minerals in North America and Europe.

Moreover, the increasing emphasis on ESG (Environmental, Social, and Governance) factors in investment decisions is favoring projects in stable jurisdictions with strong environmental and social standards. This trend benefits companies like Canada Nickel, which are focusing on environmentally responsible production methods.

Canada Nickel's Crawford project represents a significant opportunity in the North American critical minerals sector. The company's progress in securing substantial financing commitments, coupled with strong government support and strategic partnerships, positions it favorably to meet the growing demand for responsibly sourced nickel. The innovative financing approach, combining government incentives, debt facilities, and strategic investments, could serve as a model for future critical mineral projects.

Investors should recognize the strategic importance of domestic nickel production in North America and the potential long-term value this creates. However, investors should also be mindful of the execution risks inherent in large-scale mining projects and the potential for market volatility in the nickel sector.

As the global push for electrification and energy transition continues, projects like Crawford are likely to play an increasingly important role in securing supply chains for critical minerals. Canada Nickel's ability to navigate the complex landscape of project finance, government support, and strategic partnerships will be crucial in realizing the full potential of the Crawford project and the broader Timmins nickel district.